Uber has been ruled a transportation company in the European Union, making it subject to tougher rules.
In a ruling with potential ramifications for the growing business of mobility services, the European Court of Justice, the top court in the European Union, has ruled that Uber is a transportation company.
Uber, the world’s best-known ride-hailing economy, with a valuation estimated $68 billion and operations in 600 cities worldwide, had argued it was a “digital platform” rather than a transportation services company just like any trucking or taxi company with deep roots in the industrial age.
The ruling basically confirms that Uber will continue to face regulation not only by local and national governments across Europe, but also by the EU itself.
Uber, with its anti-regulation culture, has argued for more than half a decade that it is merely a digital platform that creates a link between passengers and independent drivers.
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But while Uber has resisted, governments in the U.S. and Europe have moved to impose a variety of regulations on Uber’s drivers ranging from requiring drivers to submit to background checks other carry specific kinds of insurance as well as other limitations.
Uber CEO Dara Khosrowshahi has faced one problem after another since his arrival.
In addition, Uber has undercut its own case by imposing the age limits on the cars used to pick up passengers and set an appearance standard.
The decision opens the door for European cities to impose stricter regulations on the ride-hailing company as a taxi operator. That means Uber will have to abandon services, such as UberPop, that use nonprofessional drivers and instead abide by local rules governing taxis, experts said.
Uber said it operates in most European markets with certified drivers and won’t change things much for them. But some experts say the company and smaller competitors that see themselves mainly as digital platforms may soon be faced with new, government-imposed obstacles, which may stymie their growth.
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“The ruling certainly dampens the enthusiasm that any platform has for offering transportation service in Europe,” said Arun Sundararajan, a professor at New York University’s Stern School of Business told the Washington Post.
“European regulators don’t seem to be willing to adapt their structures to accommodate new digital business models.”
Tech industry critics have argued that powerful platform companies, such as Uber, Lyft and Task Rabbit have skirted their responsibilities to the public and to their workers.
Meanwhile, automakers, which are easing into the mobility business but have long faced tough regulation as well as unionization, appear more comfortable with evolving legal doctrine than their companies spawned in Silicon Valley.
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Ford Motor Co., for example, agreed to negotiate with the International Brotherhood of Teamsters, which is represents drivers employed by Chariot, the automaker’s commuter-oriented ride sharing start up in the Bay Area.