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Luxembourg - Uber is set to reach the end of the road in a legal battle over a question that’s reached the European Union’s top court - is the world’s most valuable startup a taxi company or not?
Uber has argued that it’s a technology platform connecting passengers with independent drivers, not a transportation company subject to the same rules as taxi services. The decision is being closely watched by the technology industry because it could set a precedent for how other companies in the burgeoning gig economy are regulated across the 28-nation bloc.
“The judgment will either promote the digital single market or lead to more market fragmentation for online innovators,” said Jakob Kucharczyk, of the Computer & Communications Industry Association, which speaks for companies like Uber, Amazon.com, Google and Facebook.
“The court should make a clear distinction between the online intermediation and the underlying service it facilitates."
The case centres around UberPop, an inexpensive ride-hailing service Uber launched in several European cities that allowed drivers without a taxi license to use their own cars to pick up passengers. Legal challenges have forced Uber to shutter its UberPop services in most major European companies in favour of UberX, which requires drivers to get a license.
A loss for Uber would mean countries in the EU will have to classify Uber as a transportation service. While Uber adheres to many taxi laws in countries where it operates, the case could lead to new regulations and fees.
"Any ruling will not change things in most EU countries where we already operate under transportation law,” Uber said in a statement.
“However, millions of Europeans are still prevented from using apps like ours. As our new CEO has said, it is appropriate to regulate services such as Uber. We want to partner with cities to ensure everyone can get a reliable ride at the tap of a button.”
Gig economy
The question of whether Uber is a transport service has long vexed regulators and lawmakers across Europe. Uber 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.
Without the pressure from regulators, companies in the gig economy will force other businesses to employ similarly aggressive business practices, said Andrew Taylor, who earlier this year was commissioned by UK Prime Minister Theresa May to come up with recommendations to regulate the gig economy.
"There’s a danger of a race to the bottom," said Taylor. "Major American companies are treating national norms, culture, regulators and tax systems in a cavalier way."
Status quo
Mark Graham, professor at the Oxford Internet Institute, said the scrutiny represents a shift against companies who by classifying themselves as technology platforms have avoided regulations facing more traditional businesses in the markets they are trying to disrupt.
Uber isn’t the only company whose business model is being questioned by policymakers. In Paris, regulators are clamping down on Airbnb, whose home-rental service has drawn complaints from hotels that are subject to a different batch of rules. Deliveroo, the food-delivery service, is also facing scrutiny over its treatment of workers in the UK and elsewhere.
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