The European Court of Justice (ECJ) has classified Uber as a transport service, meaning it will be forced to abide by more stringent industry regulations. In a landmark ruling published on December 20, the ECJ discounted Uber’s assertion it was simply a digital platform acting as an intermediary between riders and taxi drivers.
Following the ruling, an Uber spokesperson declared the ECJ judgement would have little impact on the company, as it already adheres to transportation law in “most EU countries”. However, EU member states could now impose more stringent employment or tax laws on Uber and other technology firms.
Although the ECJ agreed Uber’s mobile app had revolutionised the taxi industry, it argued this was intrinsically linked with the transportation service it supplies to customers.
EU member states could impose more stringent employment or tax laws on Uber and other technology firms as a result of the ECJ ruling
“Uber’s activity must be viewed as a whole encompassing both the service of connecting passengers and drivers with one another by means of the smartphone application and the supply of transport itself, which constitutes, from an economic perspective, the main component,” the ruling explained.
“This activity cannot therefore be split into two, for the purpose of classifying a part of the service as an information society service. Consequently, the service must be classified as a ‘service in the field of transport’.”
The ECJ ruling arose in 2014 following a dispute between Uber and a taxi drivers’ association in Barcelona, which originally centred on a now-defunct service called UberPop. Drivers using this service did not have to acquire a taxi licence, which many believed created an unfair competitive environment.
Now, by subjecting Uber to the same rules as other transportation firms, it is unlikely the company will be allowed to conduct similar business practices in the future.
Although the ECJ’s decision is just the latest regulatory hurdle placed in Uber’s path, it could have wider ramifications for other digital disruptors. Ultimately, regulators need to tread a fine line between granting consumers access to innovative new technologies and making sure digital heavyweights are subject to the same rules as everyone else.