Uber Faces Potential Identity Crisis in Europe

TIN news:  Now it must face a legislative test in Europe that could force it to operate as a transportation company and not a mere digital service as it would like.

The Verge reports on an opinion offered by Maciej Szpunar who serves as the advocate general of the European Court of Justice (ECJ). In it, Szpunar recommends that the ride-sharing service Uber be treated by EU countries as a transportation company.

The move would presumably make Uber subject to any number of regulations, perhaps driving up costs to end users in the region or outright slashing some of its product.

As noted, this is an opinion and not a piece of legislation that will be voted on by officials. The uphill battle for Uber is that, as The Verge reminds, “ECJ rulings have historically followed the advice of the advocate general.”

Szpunar explains in press release 50/17 that it was necessary to clarify whether Uber was an “information society service,” something that would allow it to carry on as it has—with riders hailing drivers who share their own cars for the trip—or whether it was akin to a taxi product.

The question stems from a 2014 Barcelona case wherein the local taxi association called out Uber for operating without regulations, thereby allowing it to seriously undercut what cab services would charge.

If it is deemed a transportation service, Uber would then need to be, “regulated by the law of the Member States.”

To be considered an information society service, the opinion notes the product must meet two standards: First, that supply, not delivered electronically, is economically independent of the service. (The example of OTAs is used in this regard whereas the service is more of an intermediary alone.) The bigger criterion is, “the provider supplies the whole service.”

The opinion continues: “According to the Advocate General, the service offered by Uber does not meet either of those two conditions. In that regard, the Advocate General observes that the drivers who work on the Uber platform do not pursue an autonomous activity that is independent of the platform. On the contrary, that activity exists solely because of the platform, without which it would have no sense.

“The Advocate General concludes that, in relation to the supply of transport, the supply where by passengers and drivers are connected with one another by electronic means is neither self-standing nor the main supply. Consequently, the service offered by Uber cannot be classified as an ‘information society service.’ Instead, the service amounts to the organization and management of a comprehensive system for on-demand urban transport.”

The opinion even questions whether you can consider Uber a ‘ride-sharing’ company. It argues that Uber’s service mandates riders pick out the location of where the car needs to drive.

Uber’s statement welcomes the ruling that is expected later in the year and claims that, regardless of the outcome, it plans on serving the continent, via The Verge: “We have seen today’s statement and await the final ruling later this year. Being considered a transportation company would not change the way we are regulated in most EU countries as that is already the situation today. It will, however, undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button.”

The Washington Post reports Uber already has a significant presence in Europe. It also has a history of being malleable to various constraints presented by each nation.

While it operates in 21 countries throughout the continent, Uber has already seen a mandate from Spain to license its UberX drivers and has waged legal battles over its service in the United Kingdom, Denmark and Italy.

 Reuters’ report suggests that, regardless of ruling, Uber will have to manage with a status quo operation in the region as “it is unlikely to be required to scale back its services by any ruling.”

At the very least, a ruling that establishes Uber as a transportation company means it will have to diminish where it still maintains services with non-licensed drivers. Reuters explains: “Silicon Valley firm's operations in Estonia, Poland, Czech Republic, and Finland where it still runs UberPOP, using amateur drivers to pick up riders.”

However, Uber may have to worry about is how this potential ruling hurts its growth prospects. As Bloomberg Technology reported in April, Uber continues to lose billions of dollars, a fact that is only assuaged because it grows at a much faster clip.