Uber Ruling Could Affect Other Tech Companies

John Lister's picture

A European court has ruled that Uber is a transport company rather than a tech business. It may not make an immediate difference to its operations, but could be a big step in the way online companies are regulated.

Uber, which describes itself as a ride-hailing firm, lets users hire a cab through a smartphone app, then pairs them with self-employed drivers in the area.

The ruling by the European Court of Justice stemmed from attempts by city officials in Barcelona, Spain to hold Uber to the same local regulations as traditional taxi services. The legal principle determined by the case now takes effect across 28 countries in Europe.

Uber Says "We're Just The Middle Men"

While the original argument in Barcelona was about whether Uber unfairly used "non-professional drivers", the key is that the court rejected Uber's argument that it is merely an intermediary and that its core business is bringing together passengers and drivers.

Instead the court ruled that the service it provides falls into the category of "services in the field of transport." That means it is subject to whichever transport regulations apply in a particular city, region or country. The practical effect of the ruling will therefore vary from place to place and Uber says it is already complying with local transport rules across Europe even where it wasn't already forced to do so. (Source: bbc.co.uk)

Other Tech Companies Could Feel Effects

The wider significance is that this is the first high-profile ruling about the status of an online company that acts as a go-between for customers and service providers. Other examples include sites that let homeowners rent out their property to tourists and sites that arrange deliveries from restaurants to homes. Many such companies argue they should be treated as a technology business rather than being part of whichever industry covers the service received by the customer.

Even leaving aside the fact that the ruling is restricted to Europe, it's not a slam dunk that other businesses will be treated in the same way. One of the key points in the court's decision was that it is Uber - rather than drivers - that set prices. That's not always the case in similar businesses. (Source: reuters.com)

Similarly, there's an ongoing debate about whether companies such as Facebook and Google should be treated as publishers in the same was as news websites, or merely as information carriers.

What's Your Opinion?

Do you agree with the court ruling? Should a company such as Uber be regulated based on the service the end user receives? Does this heavier regulation risk stifling innovation?

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matt_2058's picture

I was beginning to wonder if this would ever happen. Uber may have started off as a tech company, but now it is a taxi service. I'd see it different if they had stayed on the tech side, developing the app and staying clear of the actual service. As the article says, they set prices. It's time this happened in the US, along with Airbnb, lyft, and any other knock-offs.

I don't think it will stifle innovation. It may get some of the start-ups to re-think their plan, and that's not a bad thing. If anything, the easy way around this is to create another company that deals with the service. That company can pay a 'lease' for the app to insulate the tech side.