Europe’s top court ready to decide Uber’s niche market
EVER since Uber showed up in Europe in late 2011, the US ride-booking service has faced vocal opposition. Some of its drivers have been attacked by angry taxi drivers in Paris. Two of the company’s most senior European executives have stood trial on charges of running an illegal transportation service in France. And taxi associations from London to Frankfurt have accused Uber of flouting local rules and undermining European rivals. The company denies the accusations.
These heated battles will culminate today in arguments before the European Court of Justice, the region’s highest court, which will most likely determine how Uber can operate across the European Union, one of the company’s largest international markets.
At stake is the ride-booking service’s often aggressive worldwide expansion. Uber has opened in more than 300 cities on six continents. That has helped the US tech company reach an eye-popping valuation of $68 billion, making it one of the most successful startups ever to come out of Silicon Valley.
Such rapid growth has often pitted Uber against traditional taxi services and local labour unions, which have accused the company of disregarding working standards and transportation rules.
“We will fight against Uber in Germany and across Europe,” said Hermann Waldner, head of a taxi dispatch centre in Berlin.
But as people increasingly turn to services like Uber and rivals like Lyft, policymakers worldwide are starting to question how such businesses in the so-called sharing economy should be governed.
“Our role is to encourage a regulatory environment that allows new business models to develop,” Jyrki Katainen, the European Commission vice president for jobs, growth investment and competitiveness, said this year, before adding that a critical priority was “protecting consumers and ensuring fair taxation and employment conditions”.
For Uber and its rivals in Europe, the court case represents a watershed moment for how ride-booking companies will be able to operate in the region.
The hearing relates to a standoff between Uber and a Spanish taxi association, which filed legal proceedings in 2014, claiming unfair competition.
Later that year, Uber suspended its services in the country, including its low-cost UberPop offering, which had allowed almost anyone – after some basic security checks –to use the company’s platform to pick up passengers. Uber recently returned to Spain, this time in partnership with licensed taxi drivers.
In July 2015, a Barcelona judge referred the case to the European Court of Justice, asking the Luxembourg-based court to decide if Uber should be treated as a transporta- tion service or a digital platform.
If the court decides that Uber is a transportation service, the company will have to obey Europe’s often onerous labour and safety rules, and comply with rules that apply to traditional taxi associations. Though Uber already fulfills such requirements in many European countries, the ruling could hamper its expansion plans.
But if the judges rule that Uber is an “information society service”, or an online platform that merely matches independent drivers with potential passengers, then the company will have greater scope to offer low-cost products like UberPop and other services that have been banned in many parts of Europe.
“This case should show that European laws fully support the development of a digital single market,” said Gareth Mead, an Uber spokesman, referring to efforts to reduce barriers that restrict the access Europeans have to digital content, e-commerce products and other online services.
Asociación Profesional Élite Taxi, the Spanish group that brought the case, did not respond to repeated requests for comment.
A ruling is not expected before March at the earliest. The judges may decide to consider Uber a transportation service, an online platform, or a combination of the two, further complicating the legal standoff.
Other European taxi associations are keeping a close eye on the outcome, which will apply across the 28-member bloc.
The future of Uber’s European operations has become increasingly important for the company since it sold its fast-growing Chinese unit this year to Didi Chuxing, a local rival, after a lengthy price war between the two companies.
While Travis Kalanick, Uber’s chief executive, had targeted China for major expansion, the company settled for a minority stake in a combined Chinese operation with Didi Chuxing that is valued at roughly $35 billion.