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 such business models’ existence. The study 'Mapping Uber' looks at the main policy issues and the legal actions undertaken against the company in various countries.
The 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. A key question is related to how Uber was to be classified within the scope of the regulatory regime. In the EU, 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 levels and across nations were faced with 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 minimum wage. UK courts have already taken a stand, deciding that drivers are considered to be workers. In the US, a decision on the matter is still pending. Although the CJEU's ruling in December 2017 did not address the question of employment, it may impact the issue in the coming years.
Uber’s enormous exposure to litigation has triggered a large variety of cases against the company. Among related issues are background checks for drivers, reports to regulatory authorities, drivers’ alleged discrimination against blind people, and the physical assault of customers. In the US, which has the largest number of cases and class actions against Uber on record, the situation is even more complex due to procedural issues. Numerous disputes are awaiting a final decision on whether drivers can sue Uber in a court of law, or whether they need to resort to arbitration, since drivers’ contracts contain an arbitration clause to which drivers would have agreed to before joining the company as service providers.
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 by profiteering through endless litigation. That is why the international community should promptly react in creating a predictable legal framework for the sharing economy that will both respect the interests of traditional professions and stimulate the digital economy and new business models.