In another major blow to Uber’s ability to operate profitably within the European Union, the EU’s highest court ruled on Wednesday that the ride-hailing app company is, in fact, a transportation company, and its drivers should be subjected to all pertinent regulations for taxi and livery-cab drivers. The decision opens the US ride-hailing app up to tougher national regulation in Europe’s 28 member states. The judgment effectively shifts Uber’s legal status from a digital company to a transportation company, giving it less freedom from regulation in the EU’s single market, according to the Financial Times.
What’s worse, the final ruling from Luxembourg judges cannot be appealed and follows a preliminary ECJ opinion earlier this year that said Uber was more than a “mere intermediary” for customers trying to hail a cab, despite its use of mobile technology.
Uber “must be classified as ‘a service in the field of transport’ within the meaning of EU law”, the ECJ’s judges said on Wednesday. “Member States can therefore regulate the conditions for providing that service”. Uber has long argued its business, which connects drivers and customers through an app, should be classified as an “information society service” rather than a taxi service. This distinction allows it to benefit from looser EU digital single market rules. But today’s judgment means the EU’s 28 governments are free to impose tougher transport regulations on Uber, forcing it to comply with rules like any other mini-cab or taxi firm in Europe.
The court also found that Uber was “indispensable for both the drivers and the persons who wish to make an urban journey”. The company “exercises decisive influence over the conditions under which the drivers provide their service” said the judges. Uber has played down the implications of the judgment which looked at its peer-to-peer taxi service UberPOP. The service, which connects unlicensed drivers to riders, has been banned by several EU members on suspicion that it unfairly skirts taxi regulations. Most recently, the city of London declined to renew Uber's taxi license, effectively stripping it of its ability to operate legally.
Here's a list of European Countries where Uber is either banned, or where specific services - like UberPop - are prohibited (courtesy of Quartz):
UK: Uber will be banned in London, starting Oct. 1, if it fails to renew its license. It still operates in other cities and regions of the UK.
Bulgaria: Uber is currently banned across the country.
Czech Republic: Uber is currently banned in Brno, the country’s second-largest city.
Denmark: Uber is currently suspended because of government regulations.
France: Uber’s cheapest service, UberPop, is currently banned.
Germany: UberPop is currently banned.
Hungary: Uber is currently suspended because of government regulations.
Italy: UberPop is currently banned.
...And a map showing areas where Uber is banned, or partially banned, around the world:
While most of Uber’s largest and most lucrative markets already required Uber drivers to hold livery car licenses, the ruling is a major blow to Uber’s efforts to roll back its regulatory burden for low-cost services like UberPOP, as WSJ explains.
The judgment dashes any hopes for Uber of regulatory rollback in those jurisdictions and could embolden regulators to impose more onerous restrictions on the company. It also creates a roadblock for Uber for any potential expansion or revival of its lower-cost UberPop service, which uses drivers without professional licenses. Uber only offers the service in Poland, Czech Republic, Slovakia and Romania after rolling back the service in most other EU countries.
Uber’s loss at the hands of the ECJ had been expected back in May, when an advocate general for the court of justice issued an opinion declaring that Uber’s UberPOP service wasn’t “an information society” as the company’s lawyers claimed, but a transport service that must abide by more-strict regulatory rules governing taxi services in each jurisdiction, according to the Telegraph. Advocate generals are not judges, but their opinions in legal cases are typically followed.
This isn’t the only Uber-related case before the ECJ. In July, an advocate general issued a ruling in a separate case where Uber challenged France’s decision to ban its service, claiming France had violated EU rules when it banned Uber’s peer-to-peer ride-hailing service. France justified the ban by claiming Uber was using its “digital company” cover to skirt more-restrictive taxi regulations, the Telegraph reported.