The European court of justice has ruled that ride-hailing service Uber is a transportation company.
While this may sound fairly obvious to anyone who's ever used the service, Uber has up until this point been operating as a computer services business that connects users with drivers. This has allowed it to operate with looser regulations and licensing under EU law.
An EU directive limits the restrictions that can be placed on digital services, and it expressly excludes transportation services. Uber getting reclassified is likely to mean greater regulation on how it's allowed to operate.
Business as usual
According to Uber, it’s going to be business as usual. A spokesperson has said: “This ruling will not change things in most EU countries where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours.
“As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe. This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button.”
Uber doesn't own vehicles or directly employ drivers, which has enabled it to jump through the EU's business classification loopholes. It will be interesting to see if being classified as a transportation company does anything to change the rights for the drivers who work for Uber, an issue that's currently the subject of legal action in a number of countries.
It’s also unclear whether these changes will affect the service for the consumer. If the company has to adhere to more rules its operating costs will likely increase, and those extra costs could be passed on to customers.
The court hearing came after a Barcelona-based taxi company called Elite Taxi took Uber to court. The case was referred to the European court of justice, which ruled: “The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport. Member states can therefore regulate the conditions for providing that service.”
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