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19th of January 2018

Economy



ECJ rules Uber can be regulated as taxi company

Mehreen Khan in Brussels and Aliya Ram in London

December 20, 2017

Uber is facing tougher government oversight across Europe after the EU’s highest court ruled that the US car-hailing app should be regulated like a traditional taxi company instead of a technology group.

In a long-awaited judgment that caps years of intensifying regulatory backlash against the company, the European Court of Justice said on Wednesday Uber operated in the EU as a traditional transport business, exposing it to a far more regimented supervisory regime across the bloc’s 28 member states.

The final ruling from the Luxembourg-based judges, which cannot be appealed against, found that despite Uber’s reliance on technology, the company was “more than an intermediation service” for people trying to hail a cab.

The ruling found Uber “must be classified as a ‘service in the field of transport’ within the meaning of EU law”, giving national capitals the ability to regulate it as any other minicab or taxi business, excluding it from looser rules that govern the bloc’s digital economy.

Uber insisted that the decision would have a limited impact on its business, noting that it already operates under transport laws in several major European cities, including in London, its largest market in the continent.

It also said that it welcomed the intervention of EU regulators, arguing that it would give the company more certainty going forward.

“It is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe,” the company said. “This is the approach we’ll take to ensure everyone can get a reliable ride at the tap of a button.”

Despite its sanguine reaction, Uber had fought hard to convince courts that its UberPOP peer-to-peer taxi service, which connects drivers without commercial car licences to passengers through an app, should be classified as an “information society service” rather than a traditional taxi operation. 

The UberPOP service, which was originally challenged by the Asociacion Profesional Elite Taxi, a cabbies’ group in Barcelona, operates only in Poland, the Czech Republic, Slovakia and Romania.

The US company has since relaunched the peer-to-peer system as a regulated taxi and private-hire business in other European cities, including Madrid and Berlin.

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In determining that Uber is a traditional transport group, the court held that it “exercises decisive influence over the conditions under which the drivers provide their service”, an essential differentiation from more loosely-operated outsourcing companies.

The ruling comes amid a backlash against Uber from regulators in some of its biggest European markets.

In London, Uber’s licence renewal was rejected in September over safety concerns. The company also faces a court ruling in France, where it is accused of running an illegal taxi service when UberPOP operated in the country. 

The ECJ’s decision will have broader significance for how technology companies that offer traditional peer-to-peer services should be regulated in the EU, analysts said.

With Uber now not classified as a digital company, EU governments will no longer have to prove to the European Commission that any restrictions on its business have to be “reasonable” and “proportionate”, as stated by digital single-market rules. 

“After today’s judgment, innovators will increasingly be subject to divergent national and sectoral rules,” said Jakob Kucharczyk of the Computer & Communications Industry Association in Brussels.

Uber hires ex-Orbitz boss as No 2© Reuters

Uber has appointed its first chief operating officer, Barney Harford, former chief executive of the travel website Orbitz, to handle global operations, filling a critical role as the troubled San Francisco transport company tries to strengthen its management and put governance issues behind it, writes Leslie Hook in San Francisco.

His appointment signals that Dara Khosrowshahi, Uber’s chief executive since September, intends to focus more on strategy as he steers to company toward a public offering in 2019.

Mr Harford’s appointment as Uber’s first COO will make him the second most senior executive at the company and help solidify Uber’s top ranks, which have been hollowed out by departures over the past year. It recently hired a chief legal officer, but is still looking for a chief financial officer and an independent board chairman.

Mr Harford, who is also a board member at United Airlines, has already been working with Uber as an adviser for the last two months and will begin his new role in January.

With Mr Harford handling global operations for Uber’s core transport and food delivery services, Mr Khosrowshahi will focus on other challenges such as managing the board, dealing with litigation and playing the role of chief global diplomat.

Messrs Harford and Khosrowshahi have a long history of working together, first at Expedia, where Mr Khosrowshahi was chief executive, and then as competitors when Mr Harford became chief executive at Orbitz. Expedia ultimately acquired Orbitz in 2015, after which Mr Harford left.

Mr Harford announced his new job in a series of tweets. “The Uber team clearly wants to turn a corner. Am honored to have the opportunity to play a role in making this important and much needed transition,” he wrote.

Former Uber board member Bill Gurley, whose venture firm Benchmark is one of Uber’s biggest shareholders, also praised the move.

“I could not be more excited,” Mr Gurley wrote in a tweet. “Benchmark has long considered [Mr Harford] one of the most amazing Interest [sic] executives around, and are thrilled he is joining forces with [Dara Khosrowshahi] to lead Uber into its next chapter.”

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