In a major relief to hard-pressed taxi drivers across Europe, including Britain, the European Court of Justice (ECJ) has ruled that ride sharing aggregator Uber was not a computer service company but a transport company. The court said that to operate in Europe, Uber would have to comply with the regulations applicable of the taxi operators across the continent. The ruling is a major setback for Uber, which has been in news for all the wrong reasons in the past two years such as covering up the hacking of 57 millions customer account details, sexual harassment cases, and labour law disputes in several EU and North American countries. The court ruling will also hurt the company's expansion plans across Europe as it'll now have to function under the stricter regulations for taxi associations that have to pay heavy licencing fee and other staff-related benefits.
The company will no longer be able to treat their drivers as independent individuals or freelancers who don't get company related benefits such as medical or accidental insurance as they are hired under the short-term contracts. In the longer run, the ruling would surely have an impact on the least-regulated sharing economy, and apart from other ride-hailing firms, the companies working on the sharing business model could also get affected.
The petition was submitted in the ECJ by taxi operators in Barcelona. Uber had defended itself saying it was a computer-based platform that connected people with taxi drivers through a mobile application, and that it should be regulated under the laws governing e-commerce companies, and laws that protect such companies from harsh restrictions.
In its ruling, as reported in the Guardian, the ECJ said as Uber was an "intermediation service", "the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being 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".
However, the company said in a statement that the latest court ruling would have little affect on its functioning as it was already operating under the transportation laws applicable in most of the European countries where Uber was operational.
The company has been mired in several controversies, leading to resignation of former CEO and Uber co-founder Travis Kalanick and sacking of its executives. In 2014, the Indian woman was allegedly raped by an Uber driver in New Delhi. She had filed a lawsuit earlier but later "voluntarily" withdrew it. In June this year, she filed another case against the company and its former CEO Travis Kalanick for "unlawfully" obtaining her medical records and engaging in offensive conspiracy theories about the brutal incident. On December 9, it was reported that Uber and the complainant had agreed to settle the civil US lawsuit.
In November, it was reported that Uber paid hackers around $100,000 for not disclosing the details about 57 million accounts after a massive data breach last year. Though the incident reportedly happened last year when Uber co-founder Travis Kalanick was at the helm of affairs, new chief executive officer (CEO) Dara Khosrowshahi, who joined the company in August, fired two employees of the company responsible for its response to the hack, and apologised to investors and customers saying "none of this should have happened".