Uber has used the argument to avoid treating its drivers like actual employees who deserve a living wage and benefits. It’s how the company has tried to wiggle out of liability when drivers cause accidents or assault their passengers. And it’s how Uber explains away its decision to flout local laws that regulate how taxi companies operate.
Not anymore — at least, not in Europe.
The European Union’s top court ruled Wednesday that Uber is a transportation service that should be regulated like any other taxi operator. It was a landmark ruling, one that could make it much harder for start-ups to argue that they are simply a button on a smartphone and, therefore, not accountable to their workers and clients.
“The service provided by Uber connecting individuals with nonprofessional drivers is covered by services in the field of transport,” the European Court of Justice wrote in its decision. “Member states can, therefore, regulate the conditions for providing that service.”
The ECJ further noted that Uber “exercises decisive influence over the conditions under which the drivers provide their service.” Without the app, “persons who wish to make an urban journey would not use the services provided by those drivers.”
The case stems from a 2014 complaint by the professional taxi drivers’ association in Barcelona, which alleged unfair competition from Uber’s nonprofessional drivers in Spain. The association also charged Uber with “misleading practices.”
Elite Taxi, the group that brought the case, responded to the court decision with a tweet: “Today, taxi drivers have beaten Goliath.”
Uber, worth $68 billion, operates in 600 cities globally. Since its founding about a decade ago, the company has regularly run afoul of regulators and local legislators, along with local taxi drivers.
Its peer-to-peer service, called UberX in the United States and UberPop in most of Europe, has come under particular scrutiny. UberPop allows people to hail nonprofessional drivers for a cheap ride. But the use of unlicensed workers violated laws in several countries, and the service has since been banned in many places, including France, Germany, Spain, Italy and Sweden.
Right now, the company is also fighting for survival in London, a key European market where more than 40,000 drivers prowl the streets for business. In September, the city’s transportation authority rejected Uber’s application for a new license to operate, ruling that the ride-hailing giant is not a “fit and proper” private car-hire operator. Transport for London accused Uber of demonstrating a "lack of corporate responsibility,” including not reporting serious criminal offenses and a failure to obtain medical certificates and conduct background checks for drivers.
Mayor Sadiq Khan said the dispute may take years to resolve. “I want London to be at the forefront of innovation and new technology and to be a natural home for exciting new companies that help Londoners by providing a better and more affordable service,” Khan said at the time. “However, all companies in London must play by the rules and adhere to the high standards we expect — particularly when it comes to the safety of customers.”
The company is also locked in a legal battle about whether its drivers are employees. In November, an appeals court in Britain ruled that the company's drivers are workers and are, therefore, entitled to benefits such as holiday pay and minimum wage.
Frances O’Grady, who runs the British Trades Union Congress, hailed the decision. “Their drivers are not commodities. They deserve at the very least the minimum wage and holiday pay,” she said in a statement. “Advances in technology should be used to make work better, not to return to the type of working practices we thought we’d seen the back of decades ago.”
According to the company, Uber already follows the transportation laws of most E.U. countries where it operates.
“This ruling will not change things in most E.U. countries where we already operate under transportation law,” Uber said in a statement. “However, millions of Europeans are still prevented from using apps like ours.”
In fact, the biggest changes might come not to Uber but to other start-ups that use a similar model for everything from getting food and groceries delivered to hiring cleaning services or handymen. Right now, E.U. law protects online services from undue restrictions. National governments must inform the European Commission, the bloc's executive arm, of any potential regulations to ensure they are not discriminatory or disproportionate.
“The purpose of those rules is to make sure online innovators can achieve greater scalability and competitiveness in the E.U., unfettered from undue national restrictions,” Jakob Kucharczyk, vice president for E.U. policy at the Computer and Communications Industry Association, told Reuters. “This is a blow to the E.U.’s ambition of building an integrated digital single market.”