Taxify is in hot water after just two days in London.
That didn't take long.
London's transport body, Transport for London (TfL), has taken an interest in Taxify, a cheap rival to Uber which launched in London on Tuesday.
According to messages seen by Business Insider, TfL is checking whether Taxify and its drivers are correctly licensed to operate in London.
TfL has also just launched an "urgent investigation" into the company, according to City AM.
In the messages, Taxify warns its drivers that they are "not employed by Taxify", and that it is "not correct" to tell compliance officers that Taxify is their employer. The firm also described itself as a platform for cab operators, not an operator in and of itself.
Here's the full message:
The problems stem from the fact that any cab company — be it Uber or Addison Lee — needs an operator licence in order to send out vehicles to pick up passengers. Otherwise they're just an unlicensed cab firm. Private hire drivers also need their own licence, and can only accept bookings through a licensed operator.
This is a problem for Taxify, which isn't technically a licensed operator under the name of Taxify.
Business Insider first reported on Tuesday that, rather than obtain a licence itself, Taxify took a shortcut and bought a different company which already held an operator licence. That firm is City Drive Services. At the time, a Taxify spokeswoman told Business Insider that this was the fastest way to launch Taxify in London, and that "TfL has been notified." Taxify also emphasises it's not an operator, and just provides its app booking platform to City Drive Services.
This means any cab driver you currently order via Taxify is technically being dispatched by City Drive Services. But that's not what drivers are telling TfL. And most passengers are probably under the impression that Taxify is the operator.
If TfL's compliance officers decide Taxify's drivers have been dispatched by an unlicensed operator, it could mean a formal warning, penalties, prosecution, or a licence review.
In an updated statement, a Taxify spokesman said: "We are providing full support to our drivers in resolving any issues they are encountering with TfL. We have remained proactive in our communications with TfL throughout this process and encourage them to do the same and get in touch with us so that we can work towards a solution."
TfL confirmed that Taxify was not a licensed operator, but wouldn't comment further.
Black cab drivers took to Twitter yesterday to criticise the launch of Taxify in London, complaining that the firm would underpay drivers. They also complained about the way the firm obtained its operator licence.
And according to Wired, trade union GMB has written to TfL questioning whether Taxify is "fit and proper" to hold a licence through City Drive Services.
Taxify is currently offering 50% off all fares and promises to always be cheaper than Uber. Black cab drivers complained that anyone driving for Taxify would struggle to make money as a result.
When Business Insider spoke to Taxify chief executive Markus Villig last week, he said drivers were likely to make more money because they were free to switch between Taxify and Uber. Taxify also takes a lower fee of 10—15%, compared to Uber's 20—25%.
When Business Insider tried the service on Tuesday, one driver said he also worked for Uber, and the other said he planned to split his time 50-50 between Uber and Taxify. One of the drivers said he welcomed the competition against Uber.