Uber ruled a taxi firm by European justice court

Uber is officially a transport company and not a digital service, the European Court of Justice has ruled.

A smartphone is used to order an Uber in London. Picture: Daniel Leal

Taxi drivers honked in celebration while Uber – which is wrapping up a particularly punishing year – sought to play down yesterday’s ruling by the Luxembourg-based court. The decision might only affect its operations in four countries, and the company said it will try to keep expanding in Europe anyway.

The decision in theory applies to ride-hailing services around the 28-nation EU. But the ruling leaves it to national governments to decide how and whether to change the way they regulate Uber and similar services, which have expanded rapidly in recent years.

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Uber has gained a strong foothold and customer base in most European countries, adapting its multiple services time and again to bend to local rules when faced with legal challenges. In many places its hallmark “peer-to-peer” service is already banned, and instead Uber’s services are much like taxis, just more flexible and sometimes cheaper.

But many taxi drivers saw yesterday’s court decision as an important symbolic victory. And some other internet-based businesses fear it could pave the way for other new regulation, as European authorities look for ways to regulate companies that operate online and outside traditional sectors and do not fit in with existing laws.

The decision stems from a complaint by a Barcelona taxi drivers association, which wanted to prevent Uber from setting up in the city. The taxi drivers said Uber drivers should have authorisations and licences, and accused the company of engaging in unfair competition.

San Francisco-based Uber said it should be regulated as an information services provider, because it is based on an app that connects drivers to riders.

The court said services provided by companies like Uber are “inherently linked to a transport service” and therefore must be classified as “a service in the field of transport” within EU law.

Uber said in a statement that the ruling “will not change things in most EU countries where we already operate under transportation law”.