LONDON — Uber suffered a major blow on Monday after London transportation authorities made a surprise decision not to extend Uber’s taxi operating license because of persistent safety problems, throwing into question whether the company will be able to continue to operate in the city, its most lucrative European market.
The decision will not immediately affect Uber’s presence on London streets. The company immediately said it would appeal the decision, setting off what could be a lengthy legal process. Uber can continue to operate throughout that time. But the news comes in what has been a difficult year, including a disappointing initial public offering, executive turnover in the company’s highest ranks and continued public scrutiny over the safety of its passengers.
Transport for London, which regulates taxi and private hire services in the city, said Uber did not meet the “fit and proper” standard needed to hold a taxi license in the British capital. Regulators said Uber had a pattern of failures that placed passenger safety at risk, including breaches where unauthorized drivers were able to exploit vulnerabilities in Uber’s app to carry thousands of riders.
“It is clearly concerning that these issues arose, but it is also concerning that we cannot be confident that similar issues won’t happen again in future,” Helen Chapman, the director of licensing, regulation and charging at Transport for London, said in a statement.
London is one of Uber’s most lucrative markets, but also home to some of its most contentious struggles with government authorities. The company has been in a battle to retain its license in the British capital for years.
The city’s announcement on Monday follows a similar decision in 2017, when Uber’s license was revoked for, among other reasons, poor oversight of drivers. Uber successfully appealed the decision and was granted a 15-month license after it agreed to more government supervision and to make several policy changes, including how to report incidents to police, keeping tired drivers off the road and naming a new independent board to oversee British operations.
City authorities acknowledged that Uber “has made a number of positive changes and improvement to its culture, leadership and systems,” but said it had not gone far enough. The license expires at 11:59 p.m. on Monday.
The transport authority said that one of the main issues was a flaw in Uber’s system that let unauthorized drivers sneak onto the platform to carry riders. The drivers sidestepped rules by colluding with authorized drivers to pick up riders under their account. At least 14,000 trips were conducted by unauthorized drivers, London officials said.
“This means all the journeys were uninsured and some passenger journeys took place with unlicensed drivers,” Transport for London said.
Uber said that it notified London regulators about the unauthorized drivers in May and had since applied a technical change to fix the problem. Uber said the behavior involved 43 drivers.
The company said in a statement that it would operate as normal while it appealed the decision, which it called “extraordinary and wrong.”
“We understand we’re held to a high bar, as we should be,” Dara Khosrowshahi, Uber’s chief executive, said on Twitter. “But this TfL decision is just wrong. Over the last 2 years we have fundamentally changed how we operate in London. We have come very far — and we will keep going, for the millions of drivers and riders who rely on us.”
London’s decision stings Mr. Khosrowshahi, who took over as Uber’s chief in 2017, around the same time London revoked the company’s license the first time. Mr. Khosrowshahi joined the company with a promise of cleaning up a company culture known for prioritizing growth at all cost and flouting government regulation. But the sprawling company, with operations around the world, has continued to take criticism for its safety and not doing enough to protect both riders and drivers.
In the United States, Senator Richard Blumenthal, Democrat of Connecticut, called on Uber and Lyft to adopt fingerprint background checks on drivers, after The Washington Post reported about policies that kept some incidents from being reported to police and lack of information-sharing about problematic drivers with rival car services.
Revoking Uber’s license in London could have substantial financial implications for Uber. The city is one of its most important sources of revenue. It is the world’s largest ride-hailing company, but it has struggled to parlay that position into a profitable business. Earlier this month, Uber reported a $1.4 billion quarterly loss. Its share price is now far below the $45 per share when it held an I.P.O. in May.
This month, Uber announced a series of new security measures, including enhanced safety training for drivers, a “discrimination button” that allows drivers and passengers to report abuse and a direct line to emergency services.
In London, Uber said it would put new safety checks in place to confirm the identity of drivers before they can begin using the app. It added a similar process in Australia, after an unauthorized driver who was fraudulently using a friend’s account pleaded guilty to raping a woman.
Uber arrived in London in 2012, and around 45,000 drivers now work for the company in the city.
Sadiq Khan, the mayor of London, defended the agency’s decision, saying Transport for London could not be confident that Uber had enough regulation in place to “prevent another serious safety breach in the future.”
“I know this decision may be unpopular with Uber users, but their safety is the paramount concern,” he said in a statement.
Organizations representing drivers of London’s traditional cabs see Uber as undercutting their business and have lobbied hard against the company’s license renewal.
Some, including Steve McNamara, the general secretary of the Licensed Taxi Drivers’ Association, celebrated the decision and said Londoners would be “safer as a result.”
“Unfit operators cannot get away with deliberately shirking their responsibilities,” he said in a statement. “Uber have had 17 months to comply with the conditions of their temporary license, and yet they have continually put Londoners at risk by letting drivers on the road who aren’t properly licensed or insured.”
Others saw the decision as unfairly harming the thousands of drivers who use the platform. James Farrar, the chairman of the United Private Hire Drivers branch of the Independent Workers Union of Great Britain, said the decision would be a setback for “the most vulnerable work force in London.”
“The mayor’s decision to once again deny Uber a license will come as a hammer blow to its 50,000 drivers working under precarious conditions,” Mr. Farrar said. “Many will now face the distress of facing not only unemployment, but also crippling debt as they struggle to meet car lease payments.”
He called for a meeting with the mayor to discuss “what mitigation plan can now be put in place to protect Uber drivers.”
Muhumed Ali, a 48-year-old who has been an Uber driver for more than four years, said the decision was unfair. Although Uber drivers will not be off the roads immediately, it means that people like Mr. Ali, who drives at least 40 hours per week, will be living with constant worry. “It keeps you insecure,” he said, “unsure for your income.”