Uber is preparing for the worst after Dec. 20's landmark European Union decision to treat the ride-hailing company as a taxi company, building fear in Silicon Valley that Europe's example in the treatment of so-called “disruptive technologies” may set an example for U.S. cities keen on curbing companies such as Uber. However, the fear may be exaggerated given the hospitable U.S. climate toward unregulated disruptive tech.
In the latest legal headache for the company, Uber argued that it was simply a digital app that acted as an intermediary between drivers and customers looking for a ride and so should fall under lighter EU rules for online services. The EU Court of Justice, however, begged to differ.
“The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport,” the European Court of Justice (ECJ) said. “Member states can, therefore, regulate the conditions for providing that service.”
Uber, which allows passengers to summon a ride through an app on their smartphones, has transformed the taxi industry since its launch in 2011 and now operates in more than 600 cities globally.
Alongside rivals Lyft, Deliveroo, and Amazon, Uber has spearheaded a push into the territory of the "gig economy" – the latest depth plumbed by Silicon Valley in a "race to the bottom" for workers who are increasingly facing a dearth of job security and an abundance of unpaid time waiting for their "flexible" bit of work to trickle through.
From its inception, workers in the transportation and transit industries have subject Uber to massive pressure – including raucous protests and violent strikes – for treating its employees as independent contractors who are not entitled to basic job benefits. Uber's global labor force has denounced the precarious nature of their employment and demanded compensation for job-related expenses such as vehicle maintenance and gasoline.
While the EU has taken heed of such complaints, the U.S. has been far more amenable to the interests of Big Data and Big Tech firms like Uber, Alphabet, Amazon and Lyft.
“There’s a philosophical issue (in Europe) that we don’t have here,” said Matthew Daus, a lawyer and former chairman of the New York City Taxi & Limousine Commission. “The U.S. approach to policy has been more heavily driven by tech-based capitalism, while the European response has been to put the brakes on services that are not licensed businesses.”
Uber has taken the fight to regulators and established taxi and cab companies, expanding from a Silicon Valley startup to a business with a valuation of US$68 billion. The company is planning an initial public offering in 2019.
The EU case has been seen as a bellwether case for the burgeoning gig economy, and follows a complaint from a professional taxi drivers’ association in Barcelona that Uber’s activities in Spain amounted to misleading practices and unfair competition from Uber’s use of non-professional drivers - a service Uber calls UberPOP and which has since been suspended in Spain and other countries.
The ECJ said Uber “exercises decisive influence over the conditions under which the drivers provide their service” and that without the Uber mobile app “persons who wish to make an urban journey would not use the services provided by those drivers.”
European authorities have also had fallings-out with Apple over a 2016 decision demanding the company pay Ireland US$15 billion in back taxes, regulations in Paris for Airbnb which authorities treat as a hotel-booking service, and hate speech inquiries into social networks Twitter and Facebook.
Critics see the latest case as a potentially global precedent-setter.
“If more of these decisions come down it could have a cascading effect” on U.S. lawmakers, Daus said.
However, the U.S. edge in tech is largely a result of the country's fast and loose approach to disruptive innovations, which some critics see as a trojan horse for neoliberalism.
According to Joe Kennedy, a senior fellow at the Information Technology and Innovation Foundation in Washington, Europeans tend to be “more concerned with the precautionary principle, that innovations should be viewed sceptically until you figure out all the consequences.”