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Why Germany (and Europe) fears Uber

Taxi drivers gather next to the Olympia Stadium to protest ride-sharing apps on June 11, 2014 in Berlin, Germany. (Photo by Sean Gallup/Getty Images)

Be it Airbnb, Uber or Lyft, the idea of sharing and earning or saving money at the same time has found many supporters here in the United States. Across the Atlantic in Europe things look different: Earlier this week, a German court practically banned Uber nationally, a decision that came after months of protest against it in other countries such as France and Britain. The ruling reflects a more general public suspicion: A recent survey showed that only 14 percent of all Germans would be willing to use Uber or similar apps.

On Tuesday, Anja Floetenmeyer, a spokeswoman for a German Taxi union, pretty much summed up in one sentence what a lot of Germans think about the sharing economy promoted by companies such as Uber:

“Uber has never observed German law [...]"

The main argument of German Uber opponents such as Floetenmeyer is that the company's drivers lack the appropriate licenses and insurance to operate in the country. Last week a Frankfurt-based court ordered a temporary injunction to ban Uber's app, following this reasoning. According to the court decision made public Tuesday, the lack of licenses and insurance constituted a violation of the country's competition law. The injunction will be in place until another hearing later this year.

By referring to licenses and insurance, the court also touched on consumer rights, which are taken extremely seriously in Germany. The obsession of the country's authorities with such issues can sometimes take unusual dimensions: In 2011 for example, a German state banned companies from embedding the Facebook 'Like' button on their Web sites out of fears that these companies could be able to track personal data of Facebook users. The officials who announced the new initiative said there would be a $70,000 fine for violations. Other U.S.-based companies such as Google have faced similar opposition, and have been blamed for allegedly violating German consumer and privacy laws. Considering the potentially lethal consequences of car crashes caused by its drivers, Uber was likely to attract even more suspicion than online giants such as Google and Facebook. 

"[... and] this is Wild West capitalism.”

Just to be clear: In this case the 'Wild West' is used as a synonym for the U.S. -- and it's not supposed to be a kind comparison. Traditionally, European labor unions have been active and strong. That explains why you might frequently encounter strikes of all sorts of workers (pilots, bus drivers, taxi drivers, teachers and so on) when traveling through Europe. In Italy, nearly every third worker is part of a union. In Britain, 29 percent are unionized, and in Germany, it's 27 percent - compared to only about 11 percent in the United States. The power of European unions is a major obstacle to new competitors entering crowded markets such as the taxi business.

But the European objection to Uber reflects much more than that. "This is not about one company. This debate is about whether Europe will dare to be open to the opportunities of technology and future," Neelie Kroes, vice president of the European Commission and head of its digital agenda told the Financial Times, criticizing the German court decision. According to her, consumers "want convenience as well as protection" and Uber's handy and cheaper business model seems to offer exactly that. Although many Germans might benefit from the technology Uber is providing, lots of them are nevertheless skeptical of what they perceive as a product coming from the 'Wild West'.

In the eyes of many Europeans, Uber would destroy secure jobs of experienced taxi drivers, and replace them with unregulated 'hobby drivers' - a group of people British economist Guy Standing would consider as being part of the "precariat". According to Standing, the "precariat" is made up of those who depend on temporary or part-time jobs and have insecure employments. "The precariat is also defined as having only money wages on which to rely. Those workers do not receive pensions, medical leave, paid holidays," he says, summarizing what many Europeans are afraid of: an economy in which companies like Uber, Airbnb are completely free to promote the idea of sharing as something that is beneficial to everyone. Following Standing's argument, such a sharing economy would destroy existing jobs and replace them with insecure and unreliable opportunities to earn money.

While Standing criticizes the U.S. for its predominantly "quasi-romantic view of the sharing economy," others hope that the Germans will finally embrace the American ideas.

"The Germans should learn to show more courage to make use of the opportunities of the 21st century," says Klemens Skibicki, the Director of the German Institute for Online Communications and Law at the Cologne Business School. According to him, innovations seem to be a strength only of the German engineering sector - the broader public, however, is much more resistant to fundamental societal change.

But even Skibicki -- a strong proponent of Uber and the sharing economy -- acknowledges: "Maybe the Americans should also sometimes respect laws and doubts other countries have instead of ignoring them."