European court rules Uber is a taxi service
Uber lost a major legal battle when the European Union’s highest court declared that the ridehailing app is not just a digital company and that it must comply with the bloc’s transportation rules, a significant setback for a company already grappling with a string of scandals.
The decision by the European Court of Justice on Wednesday found that Uber operates more like a transportation service than an online platform that matches passengers with drivers. It is likely to restrict the company from expanding services that allowed non-professional drivers to offer rides to clients.
While the ruling focused on these so-called peer-to-peer operations, it will most likely be scrutinized by regulators looking more broadly at the gig economy, a growing part of the workforce, in which people operate as freelancers or on short-term contracts as opposed to holding permanent jobs.
Policy-makers around the globe have been struggling with how to frame rules for a new style of employment, as rapidly shifting business models outpace regulations that for decades were formulated around traditional 9-to-5 jobs. Legislation in many countries has not kept up with the rising trend toward atypical work arrangements that companies use to cut costs.
The uncertainty has fuelled a wave of litigation, leaving the courts to create a patchwork of regulations.
“It’s normal that authorities don’t know what to do — they can’t just issue regulations any time somebody claims to operate a new business model,” said Valerio De Stefano, a law professor at the University of Leuven in Belgium. “The litigation will lead authorities to better understand what is the reality of the work in the platform economy.”
In Uber’s case, the company has faced or brought lawsuits — including anti-competitiveness claims and labour disputes — in a number of countries in the European Union and North America.
The case before the European Court of Justice centred on a complaint brought by a taxi group based in Barcelona, Spain. The group argued that it was unfair that Uber did not have to adhere to the same rules it did while operating in the city, when Uber ran a peer-to-peer service called UberPop, which linked non-professional drivers with riders.
The service has since been disbanded in Spain and several other countries, and Uber said it now operated only with professional drivers in the vast majority of the European Union.
In the decision, the court determined that Uber, which connects drivers with riders through a smartphone app for payments, “must be regarded as being inherently linked to a transport service.” The 28 member countries in the European bloc will have to regulate “the conditions under which such services are to be provided,” the court added.
The ruling is the first to apply to Uber across the European Union. In a statement, the company said that it already operated under the transportation law of most European countries in which it did business, and that the ruling would have little impact. It added that it would continue a dialogue with cities across Europe for its services.
Elite Taxi, the group that brought the case, said in a Twitter post, “Today, taxi drivers have beaten Goliath.”
The Barcelona-based law firm representing Elite Taxi praised the decision and said in a statement that it could be “extrapolated to other businesses that keep trying to avoid legal responsibilities in the services that they provide.”