The European Court of Justice handed Uber a tough blow today. The ECJ, which operates as the high court in the EU, has declared Uber a transportation service, against Uber’s desire to be classified as a digital marketplace. This clarification was proposed because transportation companies in the EU are subject to stricter legal controls. This distinction is important because it strengthens Uber’s regulatory load and forces the company to deal more directly with local and national governments. Uber’s argument that it is simply a marketplace to connect drivers and riders was denied, in part because Uber has some control over drivers and riders, especially in price setting.
This decision has important global consequences because regulatory bodies of other countries often take the EU’s ruling as precedent. Therefore, this decision has the potential to impact Uber’s classification and regulation worldwide. It will be interesting to see which countries choose to follow this precedent when dealing with companies that claim to only create digital marketplaces, such as AirBnB, and which choose to adopt more lenient policies. I heard this ruling described as “a victory for taxi drivers over Goliath,” so I wonder if a succession of rulings in favor of taxi drivers will follow in the EU, in which case Uber will be forced to discontinue its operations continent-wide. There are already regions throughout the world that have instituted partial or outright bans on the ride sharing service, so it is not out of the picture to think the EU will follow.
This ruling completes a difficult year for Uber, including executive step-downs because of investor pressure, paying hackers $100,000 to conceal a data breach, and a removal of its operating license in London.
Nick's Tech Blog 