European ruling buries Uber's myth of a special 'platform'

The European Court of Justice (ECJ) has ruled, without the possibility of appeal, that Uber is a taxi company, not a software one. This is the official beginning of the end of the tech industry's deceitful attempt to present its innovation as something outside previous human experience and therefore outside the scope of previous regulation.

The ruling ends a legal battle started in 2014 by a taxi drivers' association in Barcelona. It accused Uber of unfair competition: The Uber Pop service used unlicensed drivers and wasn't authorised to carry passengers.

Uber, as it always does, claimed it was just an intermediary linking drivers with passengers.

The case moved up the European court hierarchy. The ECJ took the view that, since the Uber app is "indispensable for both the drivers and the persons who wish to make an urban journey" and since "Uber exercises decisive influence over the conditions under which the drivers provide their service", the firm provides a transport service, not an information one. European countries must regulate it as such, not as a software developer or an e-commerce operation.

Uber has said the ruling won't change much "in most EU countries where we already operate under transportation law". That's debatable.

Uber Pop is banned in a number of Western European countries, including Germany, France, Spain and Italy. But it's still active in most of Eastern Europe, where the regulatory authorities are weaker and, let's face it, more corruptible. In Poland, Uber Pop still operates despite the authorities' attempts to crack down on unlicensed drivers who pay no taxes on their income: Uber even pays their fines and provides free legal counsel.

The ECJ ruling tells these countries that Uber is a taxi service and should be treated as such.

There will be more bans and stricter supervision as a result, and Uber will at some point end up using licensed drivers throughout Europe. But more importantly, the ECJ decision creates a precedent for looking at what tech companies actually do, not how they do it.

For legal purposes, if it quacks like a duck and waddles like a duck, it's a duck, not an alien robot from outer space.

That gives the green light to the media industry to argue that Facebook, Twitter and YouTube are media companies. They sell to advertisers an audience that consumes content. That's what media companies do, and this mode of operation entails legal responsibility for the content, including copyright protection and compliance with hate speech laws.

European news agencies - Agence France-Presse, Deutsche Presse-Agentur and Britain's Press Association - are already asking the "platforms" to pay for their stories.

The ECJ's Uber ruling should turn such requests into legal demands.

It also tells licensed hotels that it wouldn't be a hopeless undertaking to launch a legal attack on Airbnb on the grounds that, contrary to its initial promise to bring ordinary people extra income from their apartments, it is now a platform friendly to professional landlords.

In a more general sense, it tells the world - and EU regulators who have been trying to draft special regulation for "online platforms" - that the whole concept of a "platform" was invented by tech lobbyists as a decoy.

A technology-enabled taxi service, media company, accommodation service does, at its core, what such services have always done, except now with technology.

Such services have brought an enormous amount of innovation and disruption to traditional industries. Sometimes it was useful. Taxi companies that had to face Uber have been forced to adopt apps that made life easier for clients and, in many cases, to reconsider pricing policies. Similar nice things happened in the hospitality market, where even small hotels have learned to work with online booking operators and offer more flexible pricing.

But sometimes the effect of the "platforms" has been life-threatening, as in the case of many news organisations that, thanks to the Google-Facebook advertising duopoly, have found themselves unable to pay journalists who produced popular, useful content.

Uber has made it harder for taxi drivers to work sustainable hours, make a guaranteed minimum wage and take time off - something that British courts are trying to reverse.

Airbnb has been accused of contributing to housing shortages, and at the very least, it has housed scams that left travellers stranded in strange cities.

And all these disruptors have been terrible about paying taxes in Europe.

It's hard to determine whether the good outweighs the bad. It'll probably be useful in the long run that the tech companies, mostly US-based, have gotten something of a head start thanks to regulatory confusion about the misleading "platform" concept.

Now, it's time to level the playing field and close the loopholes born of that confusion - before the new platforms simply replace traditional players while submitting to few controls that ensure consumer welfare and adequate tax collection.

The levelling will be happening throughout Europe and across industries in the next few years, and the "platforms" will either have to lump it or leave.

Meanwhile, in Barcelona, where the Uber case originated, people will keep raising their hands to hail the ubiquitous yellow and black taxis. That's the locals' preferred method, though apps also exist.

The modern world is multifaceted, and there's no single transportation model that works for every city. The one thing the ECJ decision doesn't do, though, is grant cities a licence to cramp competition. It establishes a level playing field, not a protectionist environment. The danger is that some overeager administrators and regulators will purposely misunderstand that.

BLOOMBERG VIEW.

A version of this article appeared in the print edition of The Straits Times on December 22, 2017, with the headline 'European ruling buries Uber's myth of a special 'platform''. Print Edition | Subscribe