Europe’s highest court ruled Wednesday that Uber must comply with the region’s tough transportation rules, a significant setback for the ride-booking company that has faced a string of legal woes across the Continent and farther afield.
The decision follows a years-long battle between Uber and EU taxi associations, many of which claim that the American tech company flouts Europe’s transport rules and represents unfair competition for existing players. Uber denies the allegations.
In its decision on Wednesday, though, the European Court of Justice placed itself on the side of traditional taxis.
“The service provided by Uber is more than an intermediation service,” the judges said in their ruling. The ride-booking company “must be classified as ‘a service in the field of transport.'”
The decision is a blow to Uber’s future expansion plans across the EU, but does not represent a knockout punch that many — including the Spanish taxi association that filed the original case that led to Wednesday’s ruling — had wanted.
The ride-booking company already operates, and will continue to do so, in many European countries where its digital platform connects traditional taxis and licensed minicabs with paying customers.
But by ruling that Uber is a transportation, and not a digital, service, the company will be restricted from expanding so-called peer-to-peer services that allow almost anyone with a car to use the company’s technology to collect paying customers.
Such services, which are available in the United States, are a major component of Uber’s future business plans as it looks to upend the traditional taxi industry — a strategy that, at least in Europe, will come to an end.
In a statement, Uber said the European court’s ruling would not alter how it now operates in most European countries where it already complies with existing transport rules.
The ruling also comes soon after the company was stripped of its license to operate in London and saw Travis Kalanick, its founder, resign amid an ongoing boardroom stand-off. Dara Khosrowshahi, its new chief executive, also faces difficulties in changing the internal culture at the company, which is now worth an estimated $70 billion.
“It is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe,” said Marloes van der Laan, a company spokeswoman. “This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button.”
The pan-European ruling against Uber is based on a complaint brought by a taxi group in Barcelona that was originally filed in 2014 and claimed that the ride-booking company represented unfair competition because it did not comply with the same rules that applied to existing taxis.
“We can’t allow for a business model to develop in Europe that could undermine the rights of consumers,” Montse Balagué, a lawyer for the Spanish taxi association, told the European Court of Justice last year when outlining the group’s complaints against Uber.
“We must not be misled by labels,” she added. “If there’s a transport service provided, then a company can’t hide behind a thin veil, calling itself a different service.”
The ruling against Uber had been expected after Maciej Szpunar, a senior adviser to Europe’s highest court, said that the company should be viewed as a transportation service, according to a non-binding legal opinion published in May.
In its judgement on Wednesday, the court’s judges agreed with that assessment.
Europe’s highest court focused on how Uber’s digital platform lies at the heart of how drivers and passengers connected through the company’s smartphone app.
The ride-booking service’s indispensable role in facilitating people’s journeys, the judges added, provided evidence that Uber was not merely a digital service connecting people independently, but should be treated as a transport service that exercises influence over how drivers used the technology.
Uber connects “a non- professional driver using his or her own vehicle with a person who wishes to make an urban journey.” the European Court of Justice said in a statement.
It should be seen as an “integral part of an overall service whose main component is a transport service” the judges added, and not simply as a digital platform.
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