The development of new business models on the Internet, especially those related to the so-called sharing economy - such as Uber - has been accompanied by a rising number of legal and regulatory issues that threaten to jeopardise the business models’ existence. The study 'Mapping Uber' looks at the main policy issues, and the legal action undertaken against the company in various countries.
Ride-sharing application Uber has seen a rapid expansion in the past three years. This has been accompanied by a wave of legal controversies, including court cases, rulings by regulatory authorities, and decisions by other administrative bodies. Most issues associated with the sharing economy are related to the fact that the sharing economy’s business model is still not clearly regulated.
In expanding its business, Uber presented serious competition to traditional taxi services. Many of the initial cases against the company were initiated by taxi associations on unfair competition grounds. The key question, in 2017, was related to how Uber is classified within the scope of the regulatory regime. The answer came in December 2017, when the Court of Justice of the European Union (CJEU) ruled that Uber was a transportation company, and not an information services provider.
Courts of various instances were faced with other related legal issues. Among these is the question of whether Uber’s drivers are direct employees or independent contractors. If they are employees, the company needs to provide them with employee benefits, such as social security. The UK courts have already taken a stand, in that drivers are considered to be workers. In the USA, the question is still pending. Although the CJEU's ruling in December 2017 did not address the question of employment, it may also have a bearing on the issue.
The lack of licences, safety considerations, and the non-fulfillment of other conditions that are generally necessary for taxi drivers (such as the type of car being used, insurance requirements, etc.) have also been raised in court cases.
Uber is subject to either partial or complete bans in countries including Denmark, France, Germany, Hungary and Turkey. Reasons for these prohibitions are various, ranging from alleged unfair competition to a lack of safety measures and problems with illicit dispatcher services.
In Germany, for instance, although Uber still operates in large cities such as Berlin, Munich, Düsseldorf, Frankfurt am Main, and Hamburg, a court in Cologne ruled recently that the app breaches a German law stipulating that taxis and similar services should be administered via a central dispatch office.
In Turkey, a court ruled against Uber in a lawsuit filed by the Istanbul taxi drivers’ association (arguing that the app represented unfair competition to taxi drivers) and instituted a national ban. The same reason has been cited for partial bans of Uber in Italy and the Netherlands.
Argentina is a particularly complex example. Although Uber is in legal limbo in the country, it continues to operate and says that Argentina is its fastest-growing market. Uber drivers there are faced not only with steep fines of up to US$5 000 but the danger of violent attacks from the so-called ‘Caza Ubers’ (‘Uber hunters’).
Other countries have introduced new regulations for ‘alternative transport services’. In Romania, for example, an emergency ordinance adopted in 2019 established the conditions under which providers must operate there. These include a requirement that digital ride-hailing platforms obtain a technical authorisation and pay an annual tax of around EUR10 000, and that all drivers providing ride-hailing services are licensed as providers of transportation services.
Uber’s enormous exposure to litigation has triggered a chain of other cases. Among related issues are background checks for drivers, reports to regulatory authorities, the alleged drivers’ discrimination against blind people, and physical assault of customers.
The lack of a clearly defined regulatory regime is perhaps the main reason for so many court cases. At the same time, legal loopholes are a motivation for some to exploit the situation through endless litigation for profit-making. That is why the international community should promptly react in creating a predictable legal framework for the sharing economy that will, at the same time, respect the interests of traditional professions as well as stimulate the digital economy and new business models.