Is Uber a Transportation Company or An Internet Service? European Court Says Transport

The company has argued that it is an internet company which does not employ its drivers and thus does not provide transport, per se.

It's merely a digital connector and enabler - with a $70 billion valuation, pre-IPO.

But the European court's finding means that the basis for its business model may be in doubt, at least in Europe, the company's second biggest market. A US court's recommendation that the company's theft of Waymo's driverless car technology be referred to Federal prosecutors for criminal charges adds to Uber's seemingly ever-growing legal woes. JL

Madhumita Murgia reports in the Financial Times:

The EU’s top court found Uber was a transport company, rather than an“Information Society service.”“The service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component” compared with taking passengers to their destination. If it is a transport company it can be regulated far more tightly — or even banned — by each of the bloc’s 28 members. This could have implications for other digital companies including Airbnb, Deliveroo.
 Is Uber a transport company or a digital service? The European Court of Justice sought to answer this question when one of its top lawyers offered an opinion on a long-awaited case that could have deep ramifications for both the $68bn ride-hailing app and the so-called “sharing economy” as a whole.So what happened? The EU’s top court released a non-binding opinion from one its eight advocates-general, who provide legal opinions on cases. Maciej Szpunar found Uber was a transport company, rather than an internet group or “Information Society service”, under the EU’s terms. The US ride-hailing app “must be classified as a ‘service in the field of transport’”, the advocate-general advised. This is not a ruling — that will be made by judges considering his opinion at the ECJ later this year, most likely in the summer. The judges tend to go with what their top lawyers advise.“The service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component” compared with taking passengers to their destination, according to the ECJ’s statement. What does this mean for Uber? The case could have major ramifications for both the ride-hailing app and the sharing economy as a whole. If Uber was defined as a purely digital platform, then it has the right to establish its business easily across the EU. It could set up its app in the UK, and operate its services across France, the Netherlands or Spain. But if it is a typical transport company, then it can be regulated far more tightly — or even banned — by each of the bloc’s 28 members. Has Uber had problems in European countries? The company has a long history of problems in Europe. The app’s services have at some point been banned or curtailed in Germany, France, Italy, Belgium, the Netherlands and Spain. Its headquarters in Amsterdam has been raided repeatedly, and in France, its directors were threatened with jail. Its legislative troubles were mainly due to the fact that some Uber drivers did not have professional taxi licences. Recently, the company has tried to appease local authorities by attempting to abide by local laws. It now says it conforms to all local rules and works only with independent, licensed minicab professionals. What are the implications for the sharing economy? This could have broader implications for other digital companies that offer peer-to-peer services in sectors such as accommodation and deliveries, including Airbnb, Deliveroo and Hassle, which have often attracted regulatory clampdowns. “Of course there are implications for other sharing economy platforms, whether that’s takeaway on bicycles, house cleaning or assembling Ikea furniture,” Debbie Wosskow, founding chair of Sharing Economy UK, said in November, when this case was heard in court. “Europe is an incredibly important market for all companies in this area, so the ruling could lead to a major challenge for them.”