Uber lost a major legal battle on Wednesday when the European Union’s highest court declared that the ride-hailing app is not just a digital company and that it must comply with the bloc’s transportation rules, a significant setback for a company already grappling with a string of scandals.
The decision by the European Court of Justice found that Uber operates more like a transportation service than an online platform that matches passengers with drivers. It is likely to restrict the company from expanding services that allowed nonprofessional drivers to offer rides to clients.
While the ruling focused on these so-called peer-to-peer operations, it will most likely to be scrutinized by regulators looking more broadly at the gig economy, a growing part of the work force, in which people operate as freelancers or on short-term contracts as opposed to holding permanent jobs.
The case before the European Court of Justice centred on a complaint brought by a taxi group based in Barcelona, Spain. The group argued that it was unfair that Uber did not have to adhere to the same rules it did while operating in the city, when Uber ran a peer-to-peer service called UberPop, which linked nonprofessional drivers with riders.
The service has since been disbanded in Spain and several other countries, and Uber said it now operated only with professional drivers in the vast majority of the European Union.
In the decision, the court determined that Uber, which connects drivers with riders through a smartphone app for payments, “must be regarded as being inherently linked to a transport service.” The 28-member countries in the European bloc will have to regulate “the conditions under which such services are to be provided,” the court added.The ruling comes at a crucial time for Uber.
The ruling is the first to apply to Uber across the European Union. In a statement, the company said that "it already operated under the transportation law of most European countries in which it did business, and that the ruling would have little impact". It added that it would continue a dialogue with cities across Europe for its services.
Source: New York Times- all rights acknowledged