Thursday, May 11, 2017

Uber Faces Regulation As Transport Company App, Not A Digital Service Outside Rules, Says Top EU Lawyer

Uber is really a transport company, not an internet company, in official advice given to the European Court of Justice. If it's followed by the court, the opinion will have significant impact on horizontally integrated platforms operating in Europe that present themselves as intermediaries and thus bypass many regulations.

Opinions from one of the court's Advocate Generals on any given case are significant, but not always followed by the court itself, notably in Max Schrems' "Safe Harbour" case. There the AG deemed that US-EU data arrangements met European privacy standards, only for the court to disagree.

The court will soon issue a clarification prompted by a case against Uber brought by Barcelona's licensed taxi association, Elite Taxi, which alleges that the unlicensed UberPop service is illegal. The case boils down to whether Uber can bypass local licensing requirements by qualifying as an information service.

Transport isn't covered by the European Single Market services directive, which is intended to sweep away local protectionism. So if Uber qualified as an "information service", it could sidestep the requirement to follow local taxi licensing regulations.

In the opinion of AG Maciej Szpunar, a Polish legal academic, however, it doesn't. In a press release issued by the court today, Szpunar recommends that the court reject Uber's defence in its judgement. His reason for doing so is interesting.

Szpunar set to two tests for an information service, both of which he concludes Uber fails to meet. One is that the information supply is "economically independent" of the customer-facing bit, as it is with airline reservation systems such as Amadeus and Sabre. The second test is whether "the provider supplies the whole service... so that the two services form an inseparable whole, a proviso being that the main component... is supplied by electronic means".

Uber fails to meet either standard. Drivers aren't autonomous of the platform, and wouldn't be driving around for hire if it wasn't for Uber. It's Uber, not drivers, who set the price.

"All those features mean that Uber cannot be regarded as a mere intermediary between drivers and passengers. In addition, in the context of the composite service offered by the Uber platform, it is undoubtedly transport (namely the service not provided by electronic means) which is the main supply and which gives the service meaning in economic terms.

"The Advocate General concludes that, in relation to the supply of transport, the supply whereby passengers and drivers are connected with one another by electronic means is neither self-standing (see point 1 above) nor the main supply."

Therefore, Szpunar concludes, the court should view Uber as a transportation company.