The news (extracted from Inquirer):
- The Philippines’ Land Transportation Franchising and Regulatory Board (LTFRB) has suspended the operations of ride-hailing company Uber for a month and urged it to compensate affected drivers.
- The suspension comes after it supposedly defied the LTFRB’s July 26 order not to accept and activate new drivers onto its platform.
- In response, Uber issued a short statement, saying: “Uber received an order around 6 pm tonight (August 14) to completely stop operations. We are studying the order at the moment. We will update our riders and drivers as soon as we can.”
Why it matters:
- This new order adds to the penalties Uber faces in Manila. The company, along with rival Grab, was earlier fined PHP 5 million (US$99,500) for allowing some of its drivers to operate without permits. The LTFRB has halted the issuance of new driver permits as since July 2016. Further regulatory threats are on the horizon as lawmakers look into how “ride-sharing” should be defined in Philippine law.
- Uber is caught between a rock and a hard place: complying with the order, plus the recommendation to compensate its drivers, could impact its revenue and efforts to capture market share, while doing otherwise will further sour its already fragile relations with authorities. Uber is reported to have around 66,000 vehicles in its Manila network, against Grab’s more than 52,300.
- With Uber cars possibly off the road, albeit temporarily, Filipino commuters will lose an option, which means competitors like Grab may see a spike in demand, forcing fares to rise.
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