EU's Highest Court rules Uber's a 'Taxi' company and will be regulated like one


(Bick Bhangoo) #1

Uber's global rise was based on a few genius PR misdirection's; the first was the pretense that Uber is a technology innovator and the second is that it is a technology platform. What made Uber so magical was the term "technology platform" that automatically drew people to want to be a part of the "platform." It also constantly stated that it was not another taxi service, it was a facilitator for private rides to the public, where a private car owner could earn extra money by taking a passenger the same direction they were driving, a carpooling initiative. This, of course, expanded out immediately to a full operations transportation system, where Uber customers would be matched with Uber drivers and presto you had a non-hailing taxi service in full swing.

Why did Uber stand its ground defying the logic that it was a taxi service? The answer is simple, taxi services are regulated, in every country around the world, taxi drivers and their cars are heavily vetted and were asset heavy too, where a "taxi Medallion" costs thousands of dollars, and a taxi driver must pass special tests, and taxi cars must meet constant road worthiness standards. Once Uber defined drivers as private citizens that own a car and offer their car to drive other citizens while the car owner was driving in the general direction of the passenger was the basis for distinguishing them from taxi drivers. Uber drivers are not professional drivers; they are private self-employed citizens using their cars, connected to Uber passengers via Uber's Technology Platform.

Against Uber's classifications came a ruling in the EJC, Europe's highest court ruled on the 20th December 2017 that Uber must be classified as "service in the field of transport" and must be regulated like any other taxi service in the European Union. This ruling means that the EJC dismissed Uber's app, its technology platform, and its independent contractors, recognizing that the actual act of picking up a passenger and transporting them from one location to another for a fee is basically a taxi service.

Uber's immediate reaction to this ruling, was restrained unconcern, where they stated that they already operate their services in most of the European countries under the country transportation rules. While Uber might broadcast a "no-worry" approach, the EJC signaled a change in policy towards the gig economy. They no longer accept the unbridled disdain gig economies have for legal constructs, and no longer accept that non-professionals will compete with professionals, where the professional is confined to strict rules and regulations leaving their non-professional competition free to under price them.

The EJC ruling actually has far-reaching implications for all gig economies, not just ridesharing. What stands out most is the fact that the EJC called Uber's bluff and did not accept the framework that Uber managed its operations as the "meat" of the business, rather the actual service provided. In fact, what the EJC rules are that driving for money is a professional service no matter whether you work via an app or not. The actual process of driving is the regulated activity, and any passenger that climbs into a private vehicle that has no proof of safety or adherence to transport regulations is taking their life and health into their own hands.

The EJC decision is also a slap in the face of US governance, where the money that backs the industry was used to pave the way for gig economy friendly rulings, allowing Uber and Lyft free access to just about every state, overruling Taxi claims that gig-drivers are not professionals and should not be allowed to driver’s passengers for a fee. The only state where an Uber driver is fully regulated in New York, where all Uber drivers must possess a commercial license. The EJC cannot be bought by Uber’s giant presence or cash, and as such has responded to state that while they accept gig economies are here to stay, they should play by the same rules any regulated service provides. The EJC ruling does not cancel out Uber or any competitor; it just demands that their independent drivers and vehicles meet national transportation regulations before driving a passenger.

The main detractors against Uber include their own drivers that claim they should receive similar compensation packages as full employees. The EJC ruling does not touch this issue, and rightly so. A contract is legal and binding, and if a person signs an independent contractor contract that states they are self-employed while accepting the rules and regulations of the contracting company, they cannot moan about the income after they sign. When studying how self-employed freelancers work, we invariably find clients providing incentives and penalties as well as demanding certain criteria be met for performance adherence and quality of service.

The so-called "technology platform" bluff, is just that. The app that Uber claims to be so special is used by hundreds of companies, Airbnb is one classic example, but any company that provides a "platform" where a private asset owner provides a service to a customer is basically a technology platform. The fact that Uber's is so complex, with GPS mapping, ratings, and tipping, do not make the core of their technology different to that of Airbnb's or to that of Booking.com, Expedia.com, and others. The main difference between what Uber was 5 years ago and today is the WOW factor. The technology is now old, the system is understood, people understand that all you need is a smart app and you can basically connect anyone to anything, such as online Bakers providing catering services to delivery services such as UberEats and DoorDash, even taxi companies have platforms such as Gett, which is basically a taxi version of Uber.

The EJC's ruling has ended the "rainbow" honeymoon that gig economies enjoyed. It is time to come down from the stars and realize that smartphone technology is now a veteran and any new business concept that emerges will just be sucked up into the oblivion of thousands of other platforms that are appearing every day online. From now on, all gig economies will be liable for justification to taxation and standardization and safety conforming rules.


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