(Reuters) - A debate in Europe over whether ride-hailing app Uber is merely a digital company or one providing transport services will be decided when the top European Union court hands down its verdict on Wednesday in a highly anticipated case.
While a ruling that Uber is a transport company is unlikely immediately to change the way it operates, it will give local authorities in the EU a green light to regulate the U. start-up more like a traditional taxi company, with obligations ranging from licensing to insurance.
Uber - which has clashed with local and national regulators in Europe since its launch there six years ago - says it is simply a digital app which acts as an intermediary between drivers and customers looking for a ride.
Judges at the Luxembourg-based court will decide on Wednesday whether Uber - the world’s second most valuable private venture-backed company - provides transport services, online services or a combination of both.
EU law protects online services from undue restrictions and national governments must notify the European Commission of any measures regulating them so it can ensure they are not discriminatory or disproportionate.
Transport services, on the other hand, are regulated at national and local level and there is no prior EU oversight of new rules.
“Any ruling will not change things in most EU countries where we already operate under transportation law,” a spokeswoman for Uber said.
”As our new CEO (Dara Khosrowshahi) has said, it is appropriate to regulate services such as Uber. We want to partner with cities to ensure everyone can get a reliable ride at the tap of a button.”
In May, an adviser to the Court of Justice of the European Union (ECJ) said Uber should be considered a transport provider on the grounds it does much more than link supply and demand. Although his opinion is non-binding, the judges usually follow such advice.
The case stems from a complaint of unfair competition brought by a Barcelona taxi association against Uber’s unlicensed ride-hailing service, UberPOP, which used amateur drivers to pick up riders and has since been suspended in most European cities.
Change of focus
Following protests from taxi drivers and multiple court fights, Uber has drastically cut back its use of unlicensed drivers in the EU and focused instead on its licensed services, such as UberX and UberBLACK.