Obama guru maps out Uber’s new Europe strategy

No more cowboy tactics. It’s time to play nice.

Forget everything you knew about Uber in Europe, like violent protests, arrested executives, raided offices.

No more cowboy tactics. It’s time to play nice.

The California ride-sharing company’s new strategy in Europe is more audacious, its tactics more flexible, and no cost is spared. The goal is to build a political firewall around its business model, which is not only disrupting an established industry but also a staunchly guarded employment model.

“What’s not going to work is to say we have a 40-year-old transportation law and ‘how does Uber fit into that?”’ said David Plouffe, the company’s chief strategist and board member. There is no point trying to retrofit laws written before mobile phones existed, he added.

In his most expansive interview since joining Uber just over a year go, the man who U.S. President Barack Obama credited with masterminding his journey to the White House explained Uber’s 2.0-strategy: It’s a micro-targeted, grassroots political mobilization that draws on what worked for Obama’s first presidential campaign.

Politicians across Europe are starting to notice.

“They are much less brash than they were before,” said Alexander de Croo, deputy prime minister of Belgium, where Uber has made strides this year towards legalization. “It used to be ‘we have a great idea. People like us. You have no choice.’ But they have become more sophisticated about trying to do it one step at a time.”

But change takes time, which Uber is short of as the clock ticks towards its moments of truth: The French Constitutional Court is expected to rule Wednesday whether a law banning Uber POP is unconstitutional. Two executives face fines and jail time, charged with enabling an illegal taxi service, in a trial set to start in Paris next week. Meanwhile, the European Court of Justice is weighing a critical case against Uber at the request of a Spanish judge.

“We still have difficulties in some places just to have a constructive dialogue,” Plouffe said. Some mayors don’t return letters. Other times ministers won’t take calls, even from a figure with his pedigree and mild manners.

For most new companies that sound of silence would signal a death spiral. But Uber isn’t most other companies.

In Uber’s eyes, it’s not even a competitor to the taxi industry.

“We’re not talking about the taxi market … We are not talking about competing for that. A lot of times elected officials and regulators think that we are going to divvy up the taxi market,” Plouffe said.

But because Uber sees itself as growing a much wider market for hired transportation “you don’t have to choose between taxi and Uber,” Plouffe added. “They will both co-exist.”

Grassroots campaign

Uber challenges European regulators with almost existential questions: Is their job to enable innovations or to limit them? Is Uber a tech or transportation company?

To get its message across, Uber is casting as wide a net as possible.

The company is turning to its users and drivers, rather than PR specialists and lawyers, to be the stars of its campaigns.

Drivers have collected 120,000 video testimonies, starting to appear together online under tags such as #UberLove and #UberEtMoi, and walls of support notes. Recently, 2,000 drivers responded to the British regulator Transport for London’s call for public comments on how “private hire” vehicles should be regulated.

With one-in-four Londoners using Uber — some two million people according to the company — and 20,000 drivers in the city, Uber has a support base it believes is ready to fend off unwanted political intrusion.

New York Mayor Bill de Blasio was caught off-guard last year by the city’s Uber community when he considered limiting Uber’s right to operate.

A similar clash may be coming in London. Negative comments from a range of political forces, including mayoral candidates Zac Goldsmith and Sadiq Khan, and U.K. Independence Party leader Nigel Farage, have set the stage. A union for London taxi-drivers is also suing Uber.

“If a politician comes in and wants to restrict the service that people enjoy, well my wager is that a high proportion of these two million will want candidates who understand what [Uber] means to them,” said Mark MacGann, public policy director in Europe.

Uber income equality

The second layer of Uber’s new tactics is to convince politicians the company is a job-making machine that will help their economies recover or shelter them in the next downturn.

“If someone built a factory and added 20,000 employees in London, or 40,000, you know it would be front-page news for days. That is what’s happening (with Uber),” Plouffe said.

The company, for example, says it has 15,000 drivers in Paris alone, despite its UberPOP being out of action due to the trial of the company’s executives.

Uber is also willing to distance itself from tech rivals it believes create relatively few jobs, especially for the middle class: “We’re a complete outlier in tech,” said Plouffe.

The former campaign strategist speaks with passion about how Uber can help transform the life of people struggling to make ends meet or coping with being fired.

“Wages have been stagnating in most places around the world for a couple of decades. So when someone can get on the Uber platform and drive 8 or 10 hours a week and make $10,000 or €10,000, that’s game changing,” he said.

It’s game-changing also for cash-strapped European cities, and politicians such as Deputy Prime Minister De Croo. For them more income equals more income tax revenue.

Traditional taxi drivers in Belgium declare income of just €25 a day, on average, according to De Croo, which suggests large portions of their income remain untaxed.

‘Employed’ or not

Seizing the opportunity for political advantage, Uber is now promising to crunch data to provide the Belgian state with information about how much its drivers earned each month. The idea is to take Uber from its image amongst many in Europe as a vehicle for low wages and tax avoidance, to a company that is more tax compliant than its taxi critics.

But there’s a major catch. The company doesn’t want governments to think of its drivers as employees, because it doesn’t want the costs and responsibilities that would entail.

“I don’t think anyone would say people driving eight or 10 hours a week are ‘employed,’” Plouffe offered. “What they do is fit Uber into the rest of their lives.”

It is one of the most divisive issues surrounding the company. This month, a California labor regulator ruled that at least one driver deserved employee status and benefits, while Belgium’s federal government decided the drivers in the country are contractors. 

“They have their own car, they drive when they want to and they don’t have hours that they have to work, that’s why they’re self-employed and not working for Uber,” said Bart Tommelein, Belgian secretary for combating social fraud.

Uber has tried to placate powerful unions by shifting its force of drivers up the scale — to be professionally licensed drivers under the banner of UberX instead of Pop, which uses ordinary drivers.

When Brussels taxi drivers called the latest in a series of protests this month, the International Road Transport Union — a parent body of the local union — was conspicuously absent from their list of supporters.

Stuart Colley, the spokesperson, would not comment on that point. But he sounded noticeably pragmatic about Uber: “We just want there to be licensed drivers in licensed vehicles. If Uber does that, it’s fair competition. We’re fine with it.”

It’s this sort of conversion of thinking that keeps Plouffe optimistic. “A year and a half ago in the United States things were as controversial about us as they are in Europe today.”

Plan C: Vestager

Uber would rather win just once in Europe, rather than 28 times at the national level. And it definitely does not want to spend the next decade in hand-to-hand combat over hundreds of differing municipal regulations.

Now that Uber has successfully kicked its case up to Europe’s highest court (the European Court of Justice) which must decide “what is Uber,” immediate attention has shifted to the European Commission, because as Plouffe notes “this is supposed to be one single market.”

Uber is confident the court will not make a decision that reduces rather than maintains or increases the level of competition in the European market. The company says it has trawled for such an ECJ precedent and cannot find one. In any case, it must focus on the Commission because they will assist the court by offering a written opinion on Uber by November 26.

The Commission is also set, in late October, to renew its strategy for completing the European single market it began creating in 1992. Uber wants that plan to recognize and enable the economic role that companies like itself now play in Europe’s economy.

Enter the sweet talk and expansive meeting program.

Uber does not have a single employee listed in the EU’s transparency register as a full-time Brussels lobbyist (just four part-timers). Yet it’s still spending more “than a traditional Fortune 100 company because of the local nature of the work,” says MacGann. On top of its army of users, it will also draw on communicators it is recruiting in eight EU countries, and the star power of executives like Plouffe.

Specific demands for how regulation models should change have been largely dropped.

“We’re totally agnostic about that,” says Plouffe, in a conciliatory tone rarely heard from Uber in the past.

The company is now more focused on the outcome of regulatory change than how regulators choose to get there.

It points to recent agreements in Brussels and Amsterdam, where it is converting its drivers into professionally licensed service providers to show its flexibility.

When Chief Executive Travis Kalanick or Plouffe meet with commissioners they often talk about their experience in France, where they said 22 percent of their drivers used to be unemployed.  

If Uber loses at the Court of Justice or fails to win over Transport commissioner Violeta Bulc, they are already working on a Plan C: Margrethe Vestager.

The EU’s competition commissioner wields extensive executive power, and she has not been afraid to use it in a range of technology cases, from Google’s business practices to the licensing arrangements of Hollywood studios.

That’s why Uber hopes to prevail on her, if necessary, to intervene on grounds that taxis and governments are behaving in an anti-competitive way that does not uphold the single market guaranteed in the EU treaty.

Vestager’s department “is keeping a close eye and we have regular discussions with them,” said MacGann.

Discuss. Discuss. Discuss. That’s Plouffe’s watch-word in Uber 2.0.

“I think more people are willing to have the conversation today than yesterday and more people will be willing to have it tomorrow.” 

This article was originally published on POLITICO Pro, September 21 6:00 A.M. CET