The E.U.’s top court deals a major blow to the ride-hailing company, and other services might get caught in the crossfire.
Uber is a taxi company. That’s the ruling today from the European Court of Justice, the highest court in the European Union, which interprets the union’s laws and ensures their application across all member states.
Uber, of course, has long resisted that label. It presents itself as a digital platform for connecting people, rather than as a taxi service. But a Barcelona taxi association challenged that claim in court in 2014, frustrated that Uber’s revenues had been partly and unfairly bolstered by worse pay and conditions for drivers. And Wednesday’s resounding judgement against Uber, who sought to appeal the Spanish ruling at the ECJ, is a bombshell. Not only does it mean the company faces far stricter regulation across the E.U., it also undercuts the very way Uber has tried to define itself globally.
The European Court of Justice’s ruling is clear enough, stating that a company whose service is “to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys” must be considered “a service in the field of transport.” This doesn’t necessarily mean there will be a change of rules overnight; in fact, it will only directly affect four countries where Uber has yet to be regulated: Poland, Czech Republic, Slovakia and Romania.
In other E.U. states, following a series of legal battles, Uber already operates within national transit laws. In several countries, including all of Scandinavia, it has already cut the low-cost UberPOP service that uses non-professional drivers. Furthermore, the ruling in itself would not necessarily bar Uber from relaunching a service in Barcelona, but merely require it to keep to the same standards as conventional taxi services, thus undercutting any potential professional advantage.
More broadly, there’s a degree of existential threat in the ECJ decision. Uber has largely attempted to sail above the notion that it is a regular company employing actual humans, enabling it to deny such basic employee necessities as sick and holiday pay. Wednesday’s ruling bursts that bubble. Uber’s app-based hailing system may have been the ground-breaking key to its success, but the suggestion that it is not a transportation company is increasingly hard to sustain.
Other similar app-based businesses such as food delivery services, including Grubhub and Deliveroo, may also find themselves under renewed pressure to treat the people who deliver their service as regular employees. In the U.K., Deliveroo recently won the right to give its delivery couriers neither the minimum wage nor sick pay, a judgement now more open to challenge.
The ruling comes at the end of an extremely tough year for Uber. Still reeling structurally and reputationally over sexual harassment claims, the company is currently appealing London’s September decision not to renew its license, a move that will see Uber’s vehicles disappear from the city’s streets if it’s upheld. This process could take years, during which the company could continue to operate, but the company is nonetheless under strong pressure from the British union representing cab drivers, which says Uber’s working conditions are a threat to public safety. While the convenience of its app means that Uber continues to have many European users, the unregulated tide that allowed it to roll out across Europe so fast now seems to be turning, and fast.