Top EU Court Says Uber Is A Transport Service That Can Be Regulated Like Traditional Taxis
from the if-it-looks-like-a-duck,-swims-like-a-duck,-and-quacks-like-a-duck,-then-it-prob dept
Uber is a company that provokes strong emotions, as numerous stories on Techdirt indicate. Uber has been involved in some pretty bad situations, including inappropriate behavior, special apps to hide from regulators, and massive leaks of customer information. Despite this, it is undeniable that millions of people around the world love the convenience and competitive pricing of its service.
Equally, traditional taxi services dislike it for the way Uber flouts transports regulations that they obey, which is fair enough, and hate it for the way Uber challenges their often lazy monopolies, which is not. This has led to some appalling violence in some countries, as well as numerous legal actions. One of those, instituted by a professional taxi drivers' association in Spain, has resulted in a case before the EU's highest court (pdf), the Court of Justice of the European Union (CJEU), which has just ruled as follows:
the Court declares that an intermediation service such as that at issue in the main proceedings, the purpose of which is 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 regarded as being inherently linked to a transport service and, accordingly, must be classified as 'a service in the field of transport' within the meaning of EU law.
The CJEU's reasoning was that Uber is more than a simple intermediation service. Its smartphone app is "indispensable" for the process of agreeing to deals between the driver and the customer, and Uber exercises "decisive influence over the conditions under which the drivers provide their service." As a result, the CJEU ruled that Uber is not "an information society service", but a "service in the field of transport", and may therefore be regulated just like traditional taxi services.
In practice, this means that Uber will be able to operate in the EU, but will be unable to continue with its swashbuckling approach that has seen it ignore many traditional requirements for taxi services. That result will be important for its knock-on effect on other services offered as part of the so-called "sharing economy". In fact, these are better described as new kinds of rental services, and like Uber they have often skirted around existing laws that cover their field of operation. The CJEU ruling, which can't be appealed, is likely to mean that other companies using online technology to provide such services will also need to obey relevant EU laws.
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Filed Under: cjeu, eu, regulations, ride sharing, taxi
Companies: uber
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EU Gets It
Computers are just a mechanical way of getting something done; the processes can be more complex, but the overall function doesn't really change.
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You're thinking of the European Economic Community created in the 1950s.
The treaty that created the EU in 1993 does indeed go beyond that. One of its goals:
Uber would fall under that.
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I know anti-EU types like to pretend it's a dictatorship that makes stuff up on its own, but every nation involved did actually agree to its terms, even if you personally find them dislikeable for some reason.
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Sovereign nations similarly distort the market (look up particularly some of the deals where Ireland, certain sovereigns of UK, Luxembourg and Netherlands etc. are haggling down taxes with politicians. If any of their employees did so, it would be heavy corruption and the employee would go to jail for a very long time!).
In the case of Uber the issue pretty clearly falls back on a definition of what "work for hire" is. Since Uber has already lost cases in national court, the extra level of protection for Uber is the EU court to assure the natonal laws aren't distorting the market. In this case the EU court has sided with national laws, which is actually good news insofar as avoiding unnecessary meddling.
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Of course that'll never happen here in the U.S. where they'll continue to argue "but it's only an app" even when they own all the driverless vehicles being used for "ride sharing".
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If you take money from customers and provide a service, you are in that business. You are not a "technology company" providing an app to an industry, you are the industry.
Uber sets the rules. They set the prices. They collect the money, and they pay the money out.
They are a taxi company.
If Uber was selling their software (even as a service) to taxi companies, they would be a technology company. They aren't. They are running a taxi company that uses technology.
Ding. Nailed it. NEXT!
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In other words, no this is not something for you to get all smug about, it's a discussion that needed to be had. That's what disruptive innovation and technology do - they create situations where the old rules either don't directly apply or are actually damaging, and then people have to discuss how to adapt to address the new paradigms, which is far more preferable than the knee-jerk "ban it" or "get permission before innovating" responses that some people always advocate. I know that's difficult for you to comprehend, but there we are.
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"it's a discussion that needed to be had."
It wasn't a discussion. It was a court case. The decision is binding to the EU and strikes to the very fundamentals of their business. (and no, it's not about being smug).
Uber (and many other "gig economy") companies have tried to avoid responsibilities by saying they are only a technology company. That excuse was trotted out every time so they could getout of things like minimum wage, employee benefits, insurance, and pretty much everything else. Yet, Uber controls the business. They deal with the customers, they collect the money, they set the prices, they decide who does and does not get a given job. I could go on, but I am sure even you get the point.
"people have to discuss how to adapt to address the new paradigms"
I almost giggled when I read this. I think you have been in one too many bros-meetings to trot this out.
Uber didn't want to change the rules a little, they didn't want to shift things a bit to one side. They didn't want to provide their ride hailing service to existing taxi companies. They wanted to destroy the markets by ignoring the laws, rules, and regulations that are in place at the local, state, provincial, and federal levels. Their excuse, more often than not, is the above mentioned "we are just a technology company".
It hasn't worked out very well. Uber is still burning 2 billion a year in cash trying to fight a million of the same battles. This EU decision is for them a total disaster, because it leaves them absolutely no legal leg to stand on anywhere in the EU.
https://venturebeat.com/2017/08/23/uber-is-still-burning-cash-at-a-rate-of-2-billion-a-year/
So yeah, you can shift your paradigm all you like. They can do it if they like too, provided they operate legally as a taxi company to start with.
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So, again, if I have different ideas to you, they are not to be discussed, it just means I didn't get the words you're saying. So predictatable...
"It wasn't a discussion. It was a court case."
Last time I checked, this is how the conversation about legal issues tends to go, barring action from government directly. The conversation about VHS legality was had in court. The conversation about gay marriage was had in court. Many examples to be had.
Which way would you have preferred the conversation to go, with a legally clear and binding outcome?
"Uber (and many other "gig economy") companies have tried to avoid responsibilities by saying they are only a technology company."
They are primarily a technology company. They literally supply software, not cars. They are focussed on operating primarily in another sector other than technology, though, which is why they needed to have certain issues addressed, since the way they operated in that sector was so different from the norm. Which has now been done. Nobody but you thinks this is a problem.
"I almost giggled when I read this. I think you have been in one too many bros-meetings to trot this out."
I'll guess the word I used has too many syllables then. Sorry, if I made you feel inferior by using correct terminology.
"They can do it if they like too, provided they operate legally as a taxi company to start with."
Yes, and now that the legal parameters have been made clear they can do that.
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"They are primarily a technology company. They literally supply software, not cars."
Do people pay Uber for their software? Do they pay to install the app? No, they pay when the get a ride.
So what does Uber really supply? Rides, not software, because that's what they get paid for supplying.
True, they use software to do it. True, but also not relevant.
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So... yes they pay indirectly since Uber get a cut of that fare. It's not a hard thing to understand, unless you're now going to insist that people who print free newspapers aren't in the publishing industry since people don't pay for their product.
"So what does Uber really supply? Rides, not software, because that's what they get paid for supplying."
So... Netflix aren't a software/technology company because everything they do just leads to watching a movie at the end of the day?
Why os the fact that Uber are a technology company so difficult to comprehend since that's the only thing they directly supply?
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It's difficult because it is not actually true. The person seeking transportation may indeed use their app, but what they are buying is a ride. They are giving Uber money for that ride.
If you were buying apps from Uber, they would be a tech vendor. If you were buying cars from them, they'd be a car cvendor. If you were buying widgets from them, they'd be a widget vendor. Since you are buying transportation from them, they are a transportation vendor.
There may be regulatory consequences to this. For instance, they (or their subcontractors) may need taxi medallions. I can barely spell ``EU'' and have essentially no idea of their myriad laws. If you wish to operate there, consult someone familiar with their legal requirements.
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The argument (or at least part of it) is that you do not buy transportation from Uber; you buy it from an individual, who takes advantage of the connect-drivers-with-passengers service which Uber offers by way of its app, and pays Uber a finder's fee for the convenience.
Whether or not Uber's business is actually structured in a way which would make that true nowadays is not clear to me (I have not been following it closely enough to be sure about that, and I've heard indications that they've imposed enough rules and so forth to draw the premise of having that structure into question), but certainly a business which is structured that way should not be considered a transportation vendor or a transportation company.
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That is where the argument falls down. Rider is not buying a ride from an individual.
Rider buys transportation from Uber. Her pays Uber, using payment methods established with his Uber account. The price is subject to Uber raising the price during times of high demand and probably informing you of the increase.
The transportation is the product. It may be provided under any of several Uber brands, e.g. uberX, uberXL, uberBlack. And it is all subject to an Uber arbitration agreement and Uber's choice-of-law provisions, both of which are generally detrimental to the rider, and both of which are not intended to be negotiated with the driver or subjugated to your state's law.
The application is not the product. The application has no value other than obtaining the product. In this, it is like unto the Krispy Kreme application: you are not really interested in the app, you want the donuts. Or the Papa's Pizza application: you use the app only to obtain pizza.
Uber, Krispy Kreme, and Papa's Pizza are not technology companies, even if they have people smarter than the geniuses at Google writing their respective apps. They are transportation, donut, and pizza companies.
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The argument companies like Uber make is that they only provide the technology. Yet, even from a cursory view, you can see that the control the entire process. They deal with riders, they deal with the drivers, they collect the money, they pay the money. They decide how much the ride will be.
A technology company would create software / hardware / firmware to do this stuff, and would license it to others to operate a taxi or transport company. They might even do some of it in the SaaS model. But even in that situation, they would not have any control over how much, where, when, and who. They would blindly provide the technology.
Uber is, without a doubt, a transport / taxi company.
Uber trying to stay as a technology company isn't about purity or trying to stick in a narrow box, rather it's about not wanting any real world responsibilities. The entire premise behind an Uber or an AirBNB is that they get to do all the main deciding and collecting money, and they don't want to have any involvement in actually providing the service.
Yet, they decide all of the parameters of the service, they decide who can and cannot provide the service, and they decide who will receive the service and at what price.
Uber picked all the clean and safe jobs, all the ones that involve handling and holding money, and all the ones related to deciding everything in the product (taxi service). Yet, they want to stand and say "we aren't a taxi service".
I don't think the public calls Uber and says "we want to rent your technology to go downtown". They want a taxi.
Apps (and the background processing) are tools, a means to an end. They are not the end.
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You are falling for the BS.
Exactly how many times have they sold their technology to anyone? They haven't! They are a taxi company with arguably better software than the old fashioned radio dispatch. But their income comes from users taking taxi rides, not from selling technology.
They are a hightech Taxi company, but still a taxi company.
"Yes, and now that the legal parameters have been made clear they can do that."
The legal parameters were there to start with. Uber chose to ignore them. They built a business model on the idea of specifically ignoring all the laws. End result? They have to follow the laws.
2 billion burn a year. It's not looking good.
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No, I'm addressing the truth. As ever, apologies if this challenges the strawmen and fantasies that comprise your primary arguments.
"Exactly how many times have they sold their technology to anyone?"
Every time someone uses their app! Their entire platform consists of technology. Is this really complicated for you, or are you now insisting software doesn't exist if it's not sold to someone else?
"The legal parameters were there to start with. Uber chose to ignore them. "
No, the laws were unclear on how they applied to a business model that was unthought of before Uber designed it. Now they are clear.
"2 billion burn a year. It's not looking good."
That might be a good thing. There's a lot of problems with that specific company, and it might be a good thing if they don't last. But, at least the legal path is now clear and visible for their competitors.
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Fundamentally, you are just plain wrong on this one.
Replace "app" with "phone and radios" and you arrive at the same thing, a TAXI company.
Uber makes absolutely zero dollars off of their app. 100% of their income is in arranging rides collecting money, and being the middle man (ie dispatcher) for a global taxi company.
In this situation, the company that makes the radios or makes the phones are a technology company. The company that uses that equipment to match riders with drivers is called a taxi company.
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Sadly, no. You actually prove yourself wrong in your next sentence too. Perhaps understand rather than whine and lie, you'll get it.
"Replace "app" with "phone and radios" and you arrive at the same thing, a TAXI company."
Are you honestly saying that the only difference between Uber and a "traditional" taxi company is that they replaced the radios with an app? Please, tell me you're not actually that ignorant of the subject and you're just pretending to be an idiot.
"Uber makes absolutely zero dollars off of their app. "
Do you want me to list all the companies that do the same? There's a lot of software companies who will be surprised to learn they're not in the software business, according to you.
Look, they may operate within the taxi realm, but they are fundamentally a software company. Companies that program software to control production line robots don't magically become car manufacturers because that's what their software is used to do, they remain technology and software companies.
It honestly is sad, the lengths you will go to in order to pretend you've "won" arguments, even though the point you're arguing over is irrelevant to the point. The law was previously unclear, now it's clear. End of. Why you have to pretend that Uber are not in the technology sector in order to accept this, who knows?
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Incredibly hard to have a discussion about anything with you.
All I can say is I am not the only one who figured it out. Other posters here have figured it out, and most importantly, the EU court figured it out.
I will let you live in ignorance! Merry Christmas!
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Oh, and nowhere does the EU state that Uber are not a technology company, which is the idiotic claim of yours that's being discussed here. I'd read the decision again if I were you, because the words don't say what you imagine them to say, as usual.
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Seriously!
"nowhere does the EU state that Uber are not a technology company"
By stating, that, I know that you entirely missed the point of it all (and what the court said). The idea is that the technology isn't what they do, it's a tool (a good one, it seems) to dispatch taxis, collect money, and basically replace the phone, radio, cash process of old.
But what the court says is that while they may USE technology to accomplish their service, the reality is their service is a transportation service, and subject to the rules of being a transportation service.
So they are a company with plenty of technology - but that technology is to run their taxi business.
Please understand, I am not saying they aren't a company that creates technology or uses technology. Many companies used technology. s Wal-Mart a technology company or a retailer? It has some of the best technology for brick and mortar retail in the world, honed over a very, very long time. But they are a retailer using technology.
Uber is a transport company. They use technology to do it, but the technology angle doesn't make them exempt from the real world of what they actually do for money (put riders in cars, collect the money, and charge a heft fee for doing it).
So no, I don't run away from your bully boy tactics. But damn, you got me laughing so hard I can't hardly write stuff without first looking at something more serious, like a circus clown or a Family Guy episode.
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Aaaand yet again you manage to grab defeat from the jaws of victory :)
Ah, but that's not what the court said! Read again. Now read the title of this post again. Now read it a few more times. They said that Uber is a transportation service. Taxi is one example of such a service, sure, but it's not the only one by a long shot. There are also buses, trains, limo service...
AFAIK, unless there is a previous commitment, a taxi is also required to pick up passengers from the street. In contrast, you can't get a ride by waving your hand and shouting "UBER!" at passing cars. In this, Uber is closer to a limo service, or whatever the name was.
In any case, while Uber is likely not a taxi, and possibly doesn't directly fit into any of the old categories, it's still a subtype of "transportation service". There are laws and regulations that all transportation services, taxi or not, have to obey. Uber was ignoring all of those, and can't do so any longer, at least not in the EU.
But it's not a taxi. Words mean things.
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The court says they are a transportation company.
The very definition of transporting passengers for hire is taxi, limo, livery service, or "private car service". They can't be a bus or a heavy hauling company, nor an airline or a train service.
It doesn't leave a whole lot of wiggle room.
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Why not, as locally the only bus service other than the school bus is dial a ride service, where you book your bus journeys, on a real bus.
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It's actually one of the issues that self driving cars face as well. They will have to conform to current regulation or new regulation will have to be written to carry them. With a few different models possible (taxi, shared taxi, bus mode (fixed route), or interstate travel), there may need to be new ways to look at them.
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More Europeans have read/studied Sartre.
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