European Union Court Rules Uber Must Follow the Same Rules As Taxi Companies

It's a major blow to the ride-sharing company.

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The European Union's highest court ruled Wednesday that Uber is a transportation company subject to the same regulations as taxi firms. The decision, which has been anticipated for months, is a major blow for Uber and could set a precedent for how regulators address the so-called "gig economy."

The European Court of Justice ruled that Uber is not just an online platform that connects passengers with drivers, but a transportation service in its own right. EU member nations will now regulate it as such, meaning Uber will likely be subject to the stricter rules that already apply to taxi companies, including more stringent licensing requirements for drivers.

The case stemmed from a 2014 complaint by a Barcelona taxi group, calling Uber was unfair competition because it wasn't subject to the same rules as taxi operators. Uber claims to be distinct from taxi companies and other services that use professional drivers because it uses part-timers who don't view driving as their main job.

But that's not how the European Court of Justice sees it. In a statement, the court said, "The service provided by Uber is more than an intermediation service" linking passengers and non-professional drivers. Uber's operations should be classified as a "service in the field of transport" under the law rather than an "information society service," the court said.

"This ruling will not change things in most EU countries where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours," an Uber statement said. "As our new CEO has said, it is appropriate to regulate services such as Uber and so we will continue the dialogue with cities across Europe."

Since taking the CEO job in September, Dara Khosrowshahi has been faced with a series of scandals inherited from predecessor Travis Kalanick, including a lawsuit from Waymo over self-driving trade secrets, and allegations that Uber spied on competitors. Khosrowshahi was unable to keep Uber from being banned in London, although his lobbying efforts did help soften new regulations in Brazil.

In addition to creating more trouble for Uber, the European Court of Justice ruling could impact other companies operating in the gig economy. Companies that use freelancers instead of permanent employees have managed to skirt many of the regulations that apply to more traditional rivals, but the decision to treat Uber as a transportation service could mark the beginning of the end of that laissez-faire attitude.