LUXEMBOURG • The European Union's top court ruled yesterday that Uber is an ordinary transportation company instead of an app and should be regulated as such, in a decision that will be closely watched around the world.
The case is yet another thorn in the side for scandal-rocked Uber, which has drawn the fury of local taxi drivers and officials for flouting local regulations.
"The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport," said the Luxembourg-based European Court of Justice (ECJ).
"Member states can, therefore, regulate the conditions for providing that service."
Uber claims it is a mere service provider, connecting consumers with drivers in more than 600 cities. But it has run into huge opposition from taxi companies and other competitors who say this allows it to dodge costly regulations, such as training and licensing requirements for drivers and vehicles.
The case was brought by a taxi drivers' association in the Spanish city of Barcelona.
The ECJ said in its judgment that Uber was a service that connects "by means of a smartphone application and for remuneration non-professional drivers using their own vehicle with persons who wish to make urban journeys". That means it is "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 EU court's senior adviser had said in a legal opinion in May that Uber was a transport firm.
The US company has rejected that argument, saying it will harm innovation. It said yesterday that the decision would not have much impact on its operations as it already operates under transportation law in most EU countries.
But the case has been closely watched by the technology industry because of its precedent for how firms in the gig economy ought to be regulated across the 28-nation bloc.
"To be considered a transport company will not change the regulations we are subject to in most European countries," a spokesman for Uber said, while noting: "It will, however, hurt the necessary reform of outdated laws which prevent millions of Europeans being able to find a reliable ride with just one click."
Uber has had a rough ride in Spain, where a judge ruled in 2014 that its UberPop service risked breaking the law, leading to the Barcelona submission to the ECJ. Early last year, it decided to operate only a limited version of its UberX service in Spain, which uses licensed, professional drivers instead of the amateurs who had previously worked via the UberPop app.
Uber has already had problems with the law in several European countries, particularly France where the company was forced to overhaul its business model. Last month, a labour court in London, where the company is threatened with losing its licence, said it had to pay drivers a minimum wage and give them paid leave.
AGENCE FRANCE-PRESSE, REUTERS, BLOOMBERG