In a landmark ruling on Wednesday, Dec. 20, the European Union's top court ruled that Uber is a transport service.
This is the final verdict in a legal challenge spanning several years, as various EU taxi associations have challenged Uber's claim that it's not a transport service, but a technology platform. This ruling could affect other online business in Europe as well.
Uber Deemed A Transport Service In EU
Uber is designed to provide a technology platform that enables users to request a ride through an app on their mobile device. The service first hit the market back in 2011 and has gradually expanded since then, currently operating in more than 600 cities worldwide, with more to come.
It has disrupted the taxi industry and sparked numerous protests worldwide, and the latest verdict deals a heavy blow. For those unaware of the implications for Uber, here's the deal.
EU Ruling Deals A Heavy Blow To Uber
Uber has so far claimed that it was just a digital app serving as a middleman between drivers and customers, with drivers working as independent contractors. With this classification, Uber argued that it should fall under online services, which enjoy lighter EU regulations.
With the Court of Justice of the European Union now issuing its final verdict that Uber is a transport service, Uber will have to comply with tighter regulations. More specifically, Uber must follow particular EU states' transportation regulations and can no longer claim that its peer-to-peer ride-hailing services fall under less restrictive e-commerce rules in the EU.
"[Uber] must be regarded as being inherently linked to a transport service and, accordingly, must be classified as 'a service in the field of transport' within the meaning of EU law," explains the CJEU [pdf]. "Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce."
Misleading Practices And Unfair Competition
This verdict comes as a response to a complaint from 2014 from a professional taxi drivers' association in Barcelona, Spain. The complaint argued that Uber's operations in the country consisted of misleading practices and unfair competition, as Uber used non-professional drivers who used their own cars to drive customers around.
Neither Uber Systems Spain, which is related to Uber Technologies nor the non-professional drivers had the necessary authorizations and licenses that are mandatory under the regulation of taxi services in Barcelona.
In an emailed statement to TechCrunch, an Uber spokesperson says that this ruling will not affect Uber's operations in most EU countries, where the company already complies with transport laws.
"However, millions of Europeans are still prevented from using apps like ours," adds the company spokesperson.