Uber: more than an intermediation service

The emergence of digital platforms has disrupted traditional consumption paradigms, giving rise to a new concept of economy – commonly named as sharing economy –, where ownership has been replaced by temporary, on-demand, and mediated access to goods and services shared by multiple individuals, including human labour, for monetary or non-monetary gain.[1].

From an economic perspective, its creative business models have disrupted many traditional industries, as transportation, accomodation and more over, by fundamentally changing the mechanism of matching demand with supply side in real time [2]. Almost numerous peer-to-peer platforms—in the likes of crowd-working (e.g., Airbnb, Uber, Amazon Mechanic Turk, E-Lance, Fiverr), co-innovation (e.g., Mindmixer, Social Innovator), crowd-funding (e.g., Kickstarter, Indiegogo), crowd-searching (e.g., Crowdfynd, CrowdSearching), and crowd-voting (e.g., California Report Card, Threadless) — have sprung up to facilitate both individuals and/or organizations to pool resources in resolving problems.

Sharing is, above all, an old social practice[3] which is currently being expanded and redefined through the addition of information technologies[4].

Critics, overall raised, have painted a dismal picture of this phenomenon as a means for individuals    – as well as firms – to dodge proper regulations and live beyond their means, which in turn contributes to doomsday scenarios of massive job displacements and spending habits detrimental to society.

Outlining the field of public transportation, Uber is  the well – known platform which facilitates trusted transactions between strangers[5], that is made possible by instantaneous internet communication and changes in the life, work, and purchasing habits of individual entrepreneurs and consumers[6].

The service provided aims at connecting individuals with non-professional drivers: this creates economic and other value, but it simultaneously raises a set of concerns around racial bias, safety, and fairness to competitors and workers that legal scholarship has begun to address. In light of the opportunities and challenges posed by, there is a clear urgency for a systematic and thorough scrutiny of how value creation and appropriation can take place within such economic environments, while minimizing its negative impact to society. The debate is becoming increasingly prominent in the context of the use of such service deals whether, and how, their operation should be regulated, or possibly deregulated, in correlation with their offline counterparts.

Uber and similar rideshare services are rapidly dispersing in cities across the United States and beyond. As a growing number of lawsuits are filed against Uber, several states have inaugurated reforms hoping to mitigate such problems:

  • California [7] established a new category of motor vehicle carriers known as Transportation Network Companies, that do not recognize Uber as a taxi service and require Uber drivers “to have certain insurance, perform background checks, and maintain drug and alcohol policies to ensure drivers are law abiding”;
  • Washington D.C.’s Vehicle for Hire Innovation Amendment Act,” which creates a new class for services like Uber, enforcing background checks and inspections, and specifically forbidding the manipulating fare charges.

While these policies work to ensure consumer protection, they still exempts companies like Uber from the numerous other regulations taxicab companies are subject to.

The European legal framework is not very different. Since its debut in 2011, this online taxi-hailing app has encountered tremendous opposition from local taxi services, which complain it unfairly competes by bypassing local licensing and safety laws.

With opposition growing all across Europe [8], the Spanish case referred to the European Court of Justice (“ECJ”) [9] in 2014 a crucial determination, aimed at establishing whether the service provided by the platform could be merely considered a transport activity, or, on the contrary, “an electronic intermediation or information society service”.

If Uber had deemed an intermediary, it would have become tougher for national regulators to limit its operations under the EU’s 2006 Services Directive and the 2015 Digital Single Market Strategy for Europe.

If the ECJ, on the contrary, had determined Uber was a transportation service, it might be subject to local jurisdictional boundaries determined by each member state of the EU, empowering them to determine the legality of Uber’s practice, greatly affecting the growth and future of the sharing economy in Europe.

The ECJ found, in the judgment of December 20th, that Uber’ service was more than an intermediation one: it observed that the Uber app was “indispensable for both the drivers and the persons who wish to make an urban journey”.

As already emphasized by the Conclusion of the Advocate General, the UberPop service has been considered a mixed service.

In this regard, the Court declared that an intermediation service such as that, whose purpose is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and classified as a service in the field of transport. Consequently, it must be excluded from the scope of the freedom to provide services in general of the Service Directive, as well as the ones about the internal market and electronic commerce.

Therefore, the transport sector falls under art. 4, par. 2 TFEU, one of the areas in which the European Union has competing powers with the Member States.

Even if this new qualification, many other question, mainly about labour issues, over the status of drivers, cannot be considered solved.

In this regard, Uber has recently won a legal battle in France. The proceeding was about the employment status of drivers and it pointed out the complexity of every definitory or regulatory approach.

The French labour Tribunal, in contrast with Uk ruling, has decided Uber cannot be considered as an employer instead of be qualified as an indipendent contractor.

These issues lead us to reflect any regulation of the phenomenon is not further delayed. However, any approach lacking of a holistic view should be avoided: sharing economy is such a complex phenomenon, which includes competing priorities, involving public, private but also fundamental rights. For this reason, every rulemaking process – as the Italian one  – should seize the opportunity to proceed with consistent but, above all, effective reforms.


La recente sentenza della Corte di giustizia del 20 dicembre 2017 costituisce un tassello importante nella nota vicenda Uber, fornendo un importante orientamento per le singole legislazioni nazionali.

 

[1] S. Ranchordas, K. Zurek, Z. Gedeon, Home-Sharing in the Digital Economy: The Cases of Brussels, Stockholm, and Budapest: Impulse Paper prepared for the European Commission, www.europa.eu.

[2] Z. Li, Y. Hong, Yili, Z. Zhang, Do On-demand Ride-sharing Services Affect Traffic Congestion? Evidence from Uber Entry (August 30, 2016), http://dx.doi.org/10.2139/ssrn.2838043.

[3] R. Belk, R., Sharing, Journal of Consumer Research, 36(5) (2010), pp. 715-734.

[4] M. Murphy,  Cities as the Original Sharing Platform: Regulation of the New “Sharing” Economy (2017), 12 J. Bus. & Tech. L. 127, p. 1.

[5] R. Calo, A. Rosenblat, The Taking Economy: Uber, Information, and Power (2017), Columbia Law Review, Vol. 117, 2017; University of Washington School of Law Research Paper No. 2017-08, http://dx.doi.org/10.2139/ssrn.2929643.

[6] M. Anderson, M. Huffman, The Sharing Economy Meets the Sherman Act: Is Uber a Firm, a Cartel, or Something in Between?  (2017), Columbia Business Law Review, Forthcoming; Indiana University Robert H. McKinney School of Law Research Paper No. 2017-8, available at https://ssrn.com/abstract=2954632.

[7] Barbara Berwick v Uber Technologies Inc., Labor Commissioner, State of California, State Case Number: 11–46739 EK, 3 June 2015, 43 W. St. U. L. Rev. 321 (2016), p. 2.

[8] William Louch, EU Commission Launces Study on Uber, PARLIAMENT MAG. (Sept. 1, 2015), https://www.theparliamentmagazine.eu/articles/news/eu-commission-launches-study-uber.

[9] Julia Fioretti & Andrew Callus, Spanish Judge Asks EU Top Court for Key Uber Ruling, REUTERS (Jul. 20, 2015),

http://www.reuters.com/article/2015/07/20/us-uber-eu-ecj-idUSKCN0PU1LP20150720.