Court edict ‘giant blow to Uber’s business model’
TRANSPORT
BARCELONA• Uber suffered a new blow Wednesday as the European Union’ s top court ruled it should be regulated as a transport company instead of a technology service, a decision that crimps its activities around Europe and could weigh on other app- based companies too.
Taxi drivers honked horns to celebrate the ruling, which punctures Uber’s image as the pioneer of a new gig economy that’s setting its own rules while governments clamber to keep up.
Uber — which is wrapping up a particularly punishing year — sought to play down the decision, which might only affect the company’s operations in four countries. Uber said it will try to keep expanding in Europe anyway.
The decision by the European Court of Justice in theory applies to ridehailing services around the 28-nation EU. But the ruling leaves it to national governments to decide how and whether to change the way they regulate Uber and similar services.
Uber has gained a strong foothold and customer base in most European countries, adapting its multiple services to bend to local rules when faced with legal challenges. Its hallmark lowcost service — hooking up unlicensed freelance drivers with riders via an app — is already banned in many European cities and instead Uber’s services are much like taxis, just more flexible and sometimes cheaper.
Some other i nternetbased businesses fear the ruling could suppress innovation and usher in other restrictions as European authorities look for ways to regulate companies that operate online and outside traditional sectors and don’t fit in with existing laws.
The decision stems from a complaint by a Barcelona taxi drivers association, which wanted to prevent Uber from setting up in the Spanish city. The taxi drivers said Uber drivers should have authorizations and licenses and accused the company of engaging in unfair competition.
Arguing its case, San Francisco-based Uber said it should be regulated as an information services provider because it is based on an app that connects drivers to riders.
The court said in a statement that services provided by companies like Uber are “inherently linked to a transport service” and therefore must be classified as a “service in the field of transport” within EU law. It says the EU directive on electronic commerce does not apply to companies like Uber.
Uber said in a statement the ruling “will not change things in most EU countries where we already operate under transportation law” and it will “continue the dialogue with cities across Europe” to allow access to its services.
The company has already been forced to adhere to national transport legislation in several EU countries, where its offerings are limited and it is regulated like a private car service.
Poland, the Czech Republic, Slovakia and Romania are the only countries where the company still offers so-called “peer- to- peer” services linking freelance drivers with riders and where Wednesday’s ruling might have a direct impact.
But Mike Ramsey, analyst at research firm Gartner, called Wednesday’s ruling a “giant blow to Uber’s business model. The company has been walking the line for a long time. For Uber to keep existing in these markets, it may have to change its model entirely.”
In Spain, the company operates through tourism transportation licenses issued in some cities, but its unlicensed service that prompted the lawsuit is banned. In Canada and the U.S ., U be rand competitors such as Lyft are governed by a patchwork of local regulations.