The European Union’s top court is set to soon decide on the question of whether Uber technologies Inc. – the company that owns the ride hailing app of the same name, is a taxi company or an IT company.
Uber has argued that the rules and regulations that are applicable on the taxi companies cannot be implemented on it because it simply provides an electronic platform for the connection of independent drivers and passengers and hence it is a technology company. This decision is being eagerly awaited by the burgeoning gig economy in Europe because the outcome would decide the regulatory treatment that such firms would face within the EU.
“The judgment will either promote the digital single market or lead to more market fragmentation for online innovators,” said Jakob Kucharczyk, of the Computer & Communications Industry Association. The body speaks for companies like Uber, Amazon.com Inc., Google and Facebook Inc. “The court should make a clear distinction between the online intermediation and the underlying service it facilitates.”
Drivers who do not have a license for a taxi are allowed to use their own vehicles for the pick up and drop of passengers against a fee by another ride hailing app UberPop of Uber- which is seemingly popular in several European cities and the case, whose ruling is awaited, is centered around that app. The company has bene forced to stop the UberPop app in most of the major European countries due to legal challenges. Countries demanded that Uber uses its UberX app that mandates the possession of a taxi license for drivers.
Uber could be classified as a transportation company if it looses out in the case. There could be new regulations and fees if Uber looses the case even though the company already conforms to many taxi regulations in countries it operates in.
“Any ruling will not change things in most EU countries where we already operate under transportation law,” Uber said in a statement. “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. We want to partner with cities to ensure everyone can get a reliable ride at the tap of a button.”
Regulators and lawmakers in Europe have been annoyed by the question about whether Uber is a transport service or an IT service. There have been allegations against Uber by taxi drivers used by it over unfair avoidance of the company of regulation which seek to be enforced on its established competitors. This has created both real and legal roadblocks for Uber in the EU region.
Flexible work hours are offered to worker by the apps, argue startups. But profits are being made by such companies even as they deny the workers benefits like pay or vacation time, argue regulators, governments and unions.
Similar aggressive tactics would be forced to be adopted by the rivals of large companies in the gig economy, if no action is taken to pressurize such companies by the regulators, argues Andrew Taylor. He was appointed by U.K. Prime Minister Theresa May to provide recommendations for effective regulation of these new types of business.
“There’s a danger of a race to the bottom,” Taylor said. “Major American companies are treating national norms, culture, regulators and tax systems in a cavalier way.”
(Adapted from Bloomberg)