In Europe, Is Uber a Transportation Service or a Digital Platform?

Ever since Uber showed up in Europe in late 2011, the American ride-booking service has faced vocal opposition.

Some of its drivers have been attacked by angry taxi drivers in Paris. Two of the company’s most senior European executives have stood trial on charges of running an illegal transportation service in France. And taxi associations from London to Frankfurt have accused Uber of flouting local rules and undermining European rivals. The company denies the accusations. These heated battles will culminate on Tuesday in arguments before the European Court of Justice, the region’s highest court, which will most likely determine how Uber can operate across the European Union, one of the company’s largest international markets.

At stake is the ride-booking service’s often aggressive worldwide expansion. Uber has opened in more than 300 cities on six continents. That has helped the American tech company reach an eye-popping valuation of $68 billion, making it one of the most successful start-ups ever to come out of Silicon Valley. Such rapid growth has often pitted Uber against traditional taxi services and local labor unions, which have accused the company of disregarding working standards and transportation rules.

“We will fight against Uber in Germany and across Europe,” said Hermann Waldner, the head of a taxi dispatch center in Berlin. “We will try to do what we can to defend ourselves through the law.”

But as people increasingly turn to services like Uber and rivals like Lyft, policy makers worldwide are starting to question how such businesses in the so-called sharing economy should be governed.

“Our role is to encourage a regulatory environment that allows new business models to develop,” Jyrki Katainen, the European Commission vice president for jobs, growth investment and competitiveness said this year, before adding that a critical priority was “protecting consumers and ensuring fair taxation and employment conditions.”

For Uber and its rivals in Europe, the court case represents a watershed moment for how ride-booking companies will be able to operate in the region. The hearing relates to a standoff between Uber and a Spanish taxi association, which filed legal proceedings in 2014, claiming unfair competition. Later that year, Uber suspended its services in the country, including its low-cost UberPop offering, which had allowed almost anyone — after some basic security checks — to use the company’s platform to pick up passengers. Uber recently returned to Spain, this time in partnership with licensed taxi drivers. In July 2015, a judge in Barcelona referred the case to the European Court of Justice, asking the Luxembourg-based court to determine whether Uber should be treated as a transportation service or merely as a digital platform. If the court decides that Uber is a transportation service, the company will have to obey Europe’s often onerous labor and safety rules, and comply with rules that apply to traditional taxi associations. Though Uber already fulfils such requirements in many European countries, the ruling could hamper its expansion plans. Image credit.