Uber told a European court yesterday that it is not a taxi company — an assertion that has major implications and ramifications for other businesses with which the service may align or compete.
“Uber's dispute with Barcelona's main taxi operator, which in 2014 accused it of running an illegal taxi service via its UberPOP service, is seen as a landmark case which could lead the Court of Justice of the European Union (ECJ) to label it a transport company rather than a digital service,” writes Foo Yun Chee for Reuters.
“Such a ruling would subject the company to stricter rules on licensing, insurance and safety, with possible knock-on effects on other startups such as online home rental company Airbnb and food delivery company Deliveroo, other big brands in the sharing economy.”
Uber maintains that national transportation regulations in Europe are outdated, writes Sam Schechner for the Wall Street Journal, arguing “that those rules don’t apply to Uber because it is an online-service provider, rather than a transportation provider — a designation that it says should give it protection under existing EU laws.”
But the case “also raises questions about the company’s growth plans as it looks to expand beyond ride-hailing to food delivery and other online services,” points out Mark Scott in the New York Times. “In its defense at the hearing, the company framed itself as a new player in Europe’s often lackluster digital economy, offering users and drivers new ways to connect and helping to support cities’ existing transportation networks.”
“Uber’s services can’t be reduced to merely a transport service,” said Uber’s lawyer, Cani Fernández. “The reduction of unnecessary barriers to information society services is critical in the development of the digital single market,” she told the 15-judge panel.
The headline on Nicholas Hirst’s piece on Politico tells us that “Uber befuddles” the magistrates, and his lede suggests “it was impossible to tell if any [of them] … had ever used the service.” Whether they have or not, there’s clearly not a consensus among EU member countries.
Spain and France have sided with the Spanish taxi union, the NYT’s Scott points out, while on Tuesday “Uber received backing from several European countries, including the Netherlands, where the company has its European headquarters.”
And “the European Commission presented guidance on the sharing economy earlier in June, saying that ‘platforms should not be subject to authorizations or licenses where they only act as intermediaries between consumers and those offering the actual service (e.g., transport of accommodation service),” CNBC’s Justina Crabtree reports.
The panel’s ruling, which will be made in about six months, will not necessarily be “binary,” she writes, “as they could decide that the company fits somewhere in between the two categories.”
Not that the European Court of Justice is the only courtroom in the global economy. If there’s one sector the “ride-hailing company” has been a boon for, it is the legal profession.
“Since moving into Europe five years ago, it has faced numerous issues with local regulators. Countries including Germany, France, Italy, Belgium, the Netherlands and Spain have all at one time or other banned or curtailed the use of Uber. Its headquarters in Amsterdam have been raided on numerous occasions. Last month, a tribunal in the U.K. ruled that Uber drivers are entitled to the minimum wage,” reports David Gilbert for VICE.
“The car-hailing application accessed via smartphones and tablets has faced roadblocks, real and regulatory, across Europe, amid complaints brought by taxi drivers who say the company tries to unfairly avoid regulations that bind established competitors,” write Stephanie Bodoni and Marie Mawad for BloombergTechnology.
“Clearly, the EU court’s decision will have a great impact,” Georgios Petropoulos, a research fellow at the Brussels-based policy group Bruegel, tells them. “We are talking about one of the most popular platforms of the collaborative economy.”
Indeed, “in many countries, the company has set up shop before asking local governments for permission to operate,” Dara Kerr observes for CNET. “That aggressive strategy has been crucial to Uber's expansion, helping it grow from a small San Francisco startup to a multinational service in just six years. The company now operates in more than 400 cities in 72 countries and is valued at $68 billion.”
And that presumably doesn’t include the tips of drivers who, as the settlement of two class-action lawsuits determined earlier this year, are independent contractors — at least in Massachusetts and California.