Is Uber an app? EU judges try to answer a nagging question

Defeat for Uber, which sees itself as an app, would expose the company to stricter licensing rules, additional operative costs and the risk of a reduced availability of drivers


Uber accessed via smartphones and tablets has faced roadblocks, real and regulatory, across Europe, amid complaints brought by taxi drivers who say the company tries to unfairly avoid regulations that bind established competitors. Photo: Reuters
Uber accessed via smartphones and tablets has faced roadblocks, real and regulatory, across Europe, amid complaints brought by taxi drivers who say the company tries to unfairly avoid regulations that bind established competitors. Photo: Reuters

Luxembourg/Paris: Fifteen judges at the European Union’s top court are trying to decide, once and for all, whether Uber Technologies Inc. is an app or a transport company. The question has long vexed regulators and lawmakers across the region.

Defeat for Uber, which sees itself as an app, would expose the company to stricter licensing rules, additional operative costs and the risk of a reduced availability of drivers. The case has been closely watched as it could set the rules of the road for others with similar business models.

Uber’s activities “cannot be reduced to a mere transport activity,” Cani Fernandez, a lawyer for the US company, told the highest panel of judges at the EU Court of Justice in Luxembourg on Tuesday.

The car-hailing application accessed via smartphones and tablets has faced roadblocks, real and regulatory, across Europe, amid complaints brought by taxi drivers who say the company tries to unfairly avoid regulations that bind established competitors.

“Clearly, the EU court’s decision will have a great impact,” said Georgios Petropoulos, a research fellow at the Brussels-based policy group Bruegel. “We are talking about one of the most popular platforms of the collaborative economy.”

Uber insists that it should remain exempt from the obligations normal transportation operators face under EU rules. While a final ruling by the EU court in Luxembourg could still be months away, the decision will be binding and could affect national disputes the company is facing in Europe.

“Electronic inter-mediation is a service in itself and it’s separate from the final service for which the user and the provider are being connected,” Fernandez told the court Tuesday. This counts “for transport or the home delivery of food, or any other type of service imaginable which can be provided by means of an Uber platform.”

French executives

The company’s local executives were hauled to court in Paris over UberPop, its most controversial service, which lets unlicensed drivers use their own car to pick up riders for low fees. Legal challenges have forced the company to halt UberPop in several European nations, including France, the Netherlands and Sweden.

UberPop is also at the center of a dispute in Barcelona, Spain, where a court decided last year to seek the EU judges’ guidance. The fight there was brought by the Asociacion Profesional Elite Taxi, a Barcelona group of taxi drivers, which argued Tuesday that Uber is misleading the courts and the public from the fact that its activity “is clearly a transport activity.”

“Let’s look at things as they really are. If there’s a transport service being provided, a company should not be able to hide behind the thin veil of describing it as a different kind of activity,” Montse Balague Farre, a lawyer representing the group, told the EU court. “We cannot allow a business model to develop in Europe which could allow for any undermining or detriment to the rights and protection of consumers.”

By not meeting legal transport requirements in Spain, Uber has a competitive advantage over companies offering similar services there, she said. Others “have to obtain an administrative authorization and in Spain they have to pay about 150,000 euros to do this,” she said.

Uber’s services “meet the requirements of EU law” as an intermediary electronic service that is “provided from a distance by electronic means at the individual request of a recipient of services,” said Uber’s lawyer Fernandez.

Some EU nations have recognized this and France and Hungary adopted rules “which clarify that Uber’s activities are separate from the provision of transport, using the term intermediary in France and an independent booking center in Hungary,” she said.

The San Francisco-based company has faced complaints around the globe about its drivers’ working conditions. A $100 million-settlement in a US lawsuit with 385,000 current and former drivers in California and Massachusetts was rejected as too low by a federal judge in August. Uber last month lost a suit over how it treats its UK drivers in the first ruling to come out of a London tribunal examining whether they’re entitled to the minimum wage or holiday pay.

Damien Geradin, a lawyer at Brussels law firm EDGE Legal, said “there is little doubt that Uber provides information society services as there is no such thing as an Uber taxi or an Uber driver.”

A negative ruling for Uber “would essentially affect the Uber Pop service, i.e. the service provided by non-professional drivers,” he said. Uber products, including UberX and Uber Black, that use licensed drivers, are used in a number of EU nations and “are not at stake here.”

The EU court has already shown its teeth in other cases involving US tech giants. In May 2014, the court forced unexpected changes on Google by creating a right to be forgotten in a ruling that allows people to seek the deletion of links on search engines if the information was outdated or irrelevant. The judgment created a furor, with Mountain View, California-based Google appointing a panel to advise it on implementing the law.

Last year, the same court struck down a 15-year-old trans-Atlantic data sharing pact, after Austrian law student Max Schrems complained about how US security services can gain unfettered access to Facebook Inc. customer information sent to the US

The case is: C-434/15, Asociacion Profesional Elite Taxi.

Bloomberg

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