Uber dealt regulation blow by European Court

Uber has been dealt another blow in the courts, with the Court of Justice of the European Union ruling the firm should be considered a taxi company and therefore subject to those rules.

While such a ruling is not necessarily a massive surprise, some might have been hoping it went the other direction. Uber will absorb the majority of the damage dealt here for the moment, though there could be wider consequences for other companies which operate in the increasingly influential ‘gig economy’.

The ruling is as follows:

“In today’s judgment, the Court declares that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law.

“Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce. It follows that, as EU law currently stands, it is for the Member States to regulate the

conditions under which such services are to be provided in conformity with the general

rules of the Treaty on the Functioning of the EU.”

Uber will continue to exist, and it will probably continue to be favoured by the vast majority as it currently is, however the impact will be seen on the operational side of things. For instance, minimum wage will now be considered a factor in the business, as will holiday pay for drivers. Uber has continually tried to define itself as a technology company, nothing more than a facilitator of relationships through an app, and therefore not subject to stricter regulations which treat drivers as more than a commodity. This ruling will banish this mindset.

What this ruling is perhaps more evidence of is governments and regulators struggling to get to grips with the digital landscape. Internet companies such as Uber have often fallen foul of regulators around the world, as they often manage to operate around traditional regulation. Perhaps this ruling should not be considered 100% correct, as Uber is the square peg being forced by the regulators into a round hole. Uber needs to be held accountable to certain transportation rules, but it reality a wider reform to make regulations more suitable for the connected economy is needed.

Uber has seemingly been the poster boy of disruption and chaos around the world, but in truth it isn’t the only one. AirBnB operates a similar business model, reliant on relationships rather than direct products and services, but has a much more tolerable reputation. That said, it has been the subject of protects in places like Barcelona.

Wherever a new idea emerges which gains mass market traction in such a short period of time there will be resistance. Those who’s business and livelihoods are disrupted by the change will try to slow or halt it. What we are currently seeing are people who have yet to adapt to the digital economy, while also governments who are struggling to understand how to regulate the new world.