Uber, Ola Cabs, Lyft and others : ‘digital services’ or transport companies?

This is a question you may not have asked yourself, I have, a few times but I always dismissed it. I just didn’t think it matters, but what do I know, turns out it so very much does. And while the company actually under question here is Uber, the outcome, and the answer to it, will be one that will affect each and every one of the above mentioned names, and others like them.

Right now, Uber is in a landmark court battle to convince Europe that it is not a transport company.


The battle will come to a head next week when the company will present its case before Europe’s top court. Uber will attempt to get the courts to believe that instead of being a transport service, it is simply a digital platform that facilitates cab bookings, by connecting willing drivers with customers.

Whether this is simply a matter of perspective or a dodge to avoid the stricter rules and higher taxes demanded from a transport company, Uber definitely benefits if it is considered a mobile service rather than a transport company.

The case is actually more important than you think, and will have huge implications upon Uber’s future in Europe. As things stand now, Uber is exempt from a lot of difficult-to-navigate rules and regulations that are compulsory for other taxi companies. This is because laws the world over tend to be slightly loose for digital platforms and startups — so as to encourage the use of technology in businesses.

The case could have a huge trickle-down effect on other digital startups that are currently considered mobile platforms. These companies, including the likes of Airbnb, which again ‘simply’ connects willing hosts with guests, may well face redefinition in the wake of Uber result.

The U.S. taxi app, which launched in Europe five years ago, has faced fierce opposition from regular taxi companies and some local authorities, who fear it creates unfair competition because it is not bound by strict local licensing and safety rules. A quick google search will give you many cases all over the world where an Uber driver was involved in crimes against women passengers. One such case that got a lot of media attention happened in Delhi, the center of Indian Politics. This caused Uber to withdraw services, and renew guidelines when it arrived later, hoping to mend the brand damage.

In Europe though, Uber found itself in the dock after Barcelona’s main taxi operator alleged in 2014 that it was running an illegal taxi service. The case concerns its UberPOP service which the company halted after the lawsuit. After Spanish courts found themselves unable to reach a clear decision, they asked Luxembourg-based European Union’s Court of Justice to take over the case. And that is exactly where Uber will be making its case next week.

The company’s current business model is all about offering flexibility to its drivers — minus the basic rights they, as employees would be entitled to — scrapping it and calling its drivers as employees would largely make Uber a huge transportation company with huge liabilities on its head. As things stand now, the company can shrug off responsibility to the person driving the car in many cases.

Supporters however say rigid regulatory obligations protect incumbents and hinder the entry of digital startups which offer looser work arrangements to workers in the 28-country European Union looking for more flexibility, albeit without basic rights.

The case has drawn global interest. The Netherlands, where Uber has its European headquarters, Finland, Poland, Greece and the European Free Trade Association (EFTA) have submitted written observations that tend to support Uber.

Which side are you on? Should Uber and others be treated as digital services? Or do you think Uber should be considered as a huge transport company and made to follow the usual licensing and safety rules?

Source : Reuters

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