Uber is officially a cab firm, says European court
In a major blow to one of the most ludicrously hyped digital economy startups, The European Court Of Justice (ECJ) has ruled Uber is officially a transport company and not a digital service. Uber ostensibly set up as a ‘ride sharing app’ for smartphones, was quickly revealed to be a taxi service that avoided expensive and restrictive safety and insurance regulations by enabling users to book rides from unlicenced drivers in untested and uninsured cars by booking through their mobile phones. While technology fanboys (and girls) screamed ‘anti — progress’ at objections, there were very real problems in the way Uber was using digital technology to ride roughshod over consumer protection laws.
The ride-hailing firm argued it was an information society service — helping people to make contact with each other electronically — and not a cab firm. However that claim was exposed as a blatant lie when Uber started billing customers for their ride and passing on a share of the fare to the owner / driver. One need not be a corporate lawyer to understand where the problem lies. From a wider perspective the ruling could have implications for other so called ‘gig economy’ hustlers that try to portray themselves as little more than an app on a phone, connecting providers with customers. Once a middle man takes a fee for providing that service in most advanced nations they have an implicit contractual obligation to the customer. Uber says this is not the case; it appears the courts, so far, are taking a different view.
The case heard by the ECJ this week arose after Uber was told to obey local taxi rules in Barcelona. A similar case has arisen since the London Transport Authority suspended Uber’s operation licence because while the owner / drivers of London’s official taxis, the famous Black Cabs, are the most stringently tested in the world on street knowledge, driving standards, health and background, anybody could be an Uber driver. Uber’s fall from grace in London resulted from their failing to report sex attacks on passengers by their drivers.
Uber said, with typical dishonesty, the ECJ verdict would make little difference to the way it operated in Europe, but experts say the case could have implications for the gig economy. Uber will now have to pay drivers the minimum wage in countries where they work and comply with local employment protection laws, which will undermine their ability to undercut legal operators on price. Other court cases in the pipeline in Germany, Spain, France and Britain relate to Uber’s failing to pay drivers the legal minimum wage and failing to offer legally required employee benefits. Uber could get round this by making drivers self employed but this would mean their registering with tax authorities and undergoing stringent driving, health and background checks. Tough if you are an illegal immigrant.
An Uber spokesperson said: “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.”
Note the deceptive suggestion that Uber is still only (if it ever was,) an app for gailing cabs.
Uber a danger to public safety, warns union
In its ruling, the ECJ said that a service whose purpose was “to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys” must be classified as “a service in the field of transport” in EU law.
It added: “As EU law currently stands, it is for the member states to regulate the conditions under which such services are to be provided in conformity with the general rules of the treaty on the functioning of the EU.” This ruling is another example of how the courts and regulators are struggling to make sense of the phenomenon known as the gig economy.
Since Uber launched less than a decade ago, the company has repeatedly come into conflict with regulators in different countries — and has consequently been forced to change its business process as in order to keep operating.
Uber itself has previously said this regulatory oversight will undermine the reform of what it calls outdated laws. The reforms Uber would like to see, in common with other companies in the digital economy, is the removal of anything which protects consumers from the greed of digital entrepreneurs who have repeatedly shown they will happily put hardened criminals in touch with naive and trusting little old ladies if there’s a quick buck in it.
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