25 May, 2017

“Sharing Economy” in the Spotlight – Let’s Call a Spade a Spade, Says EU Advocate General on Uber

On 11 May 2017, Advocate General of the Court of Justice of the European Union, Mr. Maciej Szpunar, issued a landmark opinion on legal qualification of Uber, the US ride hailing app, claiming that, from the perspective of the EU law, Uber should be characterized and treated as a transport company rather than as a mere information technology provider. The question that was posed to the EU highest court and that, according to Advocate General, needs to be assessed on a rather technical level, deals with Uber’s standing within the EU regulatory framework. Although non-binding, the opinion given by the respectable EU advising authority, might find itself reshaping the whole future of “sharing economy.”

The Advocate General himself posed a question: “What is Uber? Is it a transport undertaking, a taxi business to be blunt? Or is it solely an electronic platform enabling users to locate, book and pay for a transport service provided by someone else?” After inspecting the mechanism in detail, Advocate General came to conclusion that Uber “must be classified as a service in the field of transport”, and not as an “information society service” (contrary to what Uber’s representatives continuously argue), given that “a service that connects […] potential passengers with drivers […], where the provider of the service exerts control over the key conditions […] of transport […], does not constitute an information society service within the meaning of EU Law.”

The Advocate General’s opinion is based on a number of arguments. For instance, Uber does not merely match demand on the market of transportation services: it in fact influences the creation of supply and reshapes said supply by setting forth rules on essential characteristics of the services provided (e.g. it lays down requirements for drivers and vehicles which aim to enhance passengers’ safety). Further, the Uber application offers a rating tool, which enables passengers to give a worthwhile opinion on each driver and the service provided – which can result in the exclusion of drivers who failed to satisfy the pre-given standards. Therefore, Uber holds control, albeit indirectly, over the quality of the services provided by its drivers. Also, it is Uber that, through a number of algorithms, sets, alters and adjusts the price of the transport.

If CJEU decides to follow the Advocate General’s opinion, Uber will be in risk of facing significant financial encumbrances across Europe. Namely, in case labeled by CJEU as a transport company, Uber would not be able to further escape stringent and burdensome local taxi regulations of member states. Said outcome would inevitably add up to the costs of the popular platform and consequently, influence severely its competitiveness on the market of transportation services.

What is more, a binding decision by CJEU which would endorse Advocate General’s opinion on Uber, could have a much bigger impact than it seems at first. Namely, in such scenario, the court’s decision might have the power to bring under the spotlight other “collaborative economy” platforms such as Airbnb, Facebook, Netflix, Skype etc. The urge to mold said platforms into the existing regulatory matrixes by the European authorities could affect (or even disrupt) the existing models of “sharing economy” and bring about momentous changes in this field.

The final decision by CJEU on this case is expected in a few months.

The opinion of the Advocate General can be found here.

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