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EU Labels Uber a ‘Transport Firm’, not a Digital Company

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Is Uber a taxi company? The EU thinks so.

The European Court of Justice (ECJ) has found that cab-hailing service Uber should be classified as a transport business— and not a digital company— under EU regulation.

The ruling  might prove to be a crushing blow to the San Francisco-based company, which had argued it should be regarded as a mere technological middleman between drivers and possible passengers— a status that had allowed it to exploit regulatory loopholes in EU transport discipline.

The ECJ’s verdict dealt specifically with UberPop, a peer-to-peer service that connected non-professional drivers with people looking for a lift— and which Uber has recently discontinued in many countries. A Barcelona taxi union had taken the case to court, complaining that UberPop did not comply with the same stringent rules as all other cab companies.

While the ECJ’s decision was referred to a particular feature in a given city, its will be applicable across the whole European Union, with the potential to affect Uber’s operations across several key markets.

In its verdict, the ECJ said that UberPop’s purpose was “to connect, by a means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys” and that that granted labelling Uber as “a service in the field of transport” under 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,” the ruling read.

Uber itself hastened to assure that it is already operating as a transport company in most European markets. ” “This ruling will not change things in most EU countries, where we already operate under transportation law,” the company said in a statement. “However, millions of Europeans are still prevented from using apps like ours.”

Nonetheless, as TechCrunch underlined, the ECJ’s decision will have the effect of doing away with the semantic ambiguity Uber has been exploiting for years. For instance, as an ECJ-certified transport business, Uber will have a harder time pushing the case that its drivers are freelance contractors, rather than employees.

This could in turn result in Uber having to pay employee benefits such as sick leave and holiday pay—which would make its operational costs rise by millions.

Image via bit.ly/2BFc9CV

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