Case study

Case study questions (also down below)

1. What are the different regulation issues that the case of Uber raises?
2. What challenges do regulatory bodies such as licensing bodies and trade unions face in dealing with Uber? How should regulatory bodies respond?
3. In what different ways is the taxi driver employment status significant?
4. What are the various regulatory implications of the European Court of Justice ruling involving Uber?

Ubers regulatory challenges

Uber describes itself as a technologies company. Since it was established in San Francisco in 2009, Uber has expanded its operations to 632 other cities, across 80 countries. Although operating across a number of service areas, the field of business synonymous with the company name relates to personal point to point transportation. Uber provides a platform, accessed via a smartphone app, linking users to drivers for the purpose of point to point transportation. On this basis, Uber argues that it is not a taxi company. Moreover, Uber argues that the drivers who are linked by their online platform are not employees but independent contractors. Ubers website states: There are over 16,000 employees at Uber as of 2017, but these are distinct from the 2 million drivers who service the 10 Million Trips completed each day (Uber, 2018). Ubers business model presents a number of new challenges for the regulation of activities associated with its operations worldwide.

By maintaining that it is a technologies company and not a taxi company, Uber does not come under the jurisdiction of the regulatory mechanisms that cover the operations of traditional taxi companies. The lack of coverage has provided the imperative for regulatory changes to reflect developments in the sector. For example, the government of New South Wales, Australia, established a Point to Point Transport Taskforce to address these new challenges (ZDNet, 2015), in recognition that:

Shifts in demographics, technology and social attitudes are changing peoples expectations of point to point transport and the way they seek and use these services. However, the regulatory framework does not adequately accommodate these changes Point to point transport providers have already begun to adapt, and government regulation must follow. (NSW Government, 2015a: 2, 9)

The imperative for regulatory change came from the emergence of the new business model, but pressure for change also came from the traditional taxi industry. In addition to voicing concerns over such things as passenger safety (Moir, 2016), driver background checks (BBC News, 2015) and the monitoring of vehicle maintenance standards, the lack of coverage by existing taxi regulation has been seen as providing an unfair competitive advantage to Uber. In turn this has led to calls for de-regulation of traditional services so that the taxi industry is liberated from the regulatory constraints that are making it difficult for providers to adapt (NSW Government, 2015b: 5). On the basis of constituting unfair competition for traditional taxi companies, Uber has faced bans in Bulgaria and Italy (Rhodes, 2017). An equivalent ban exists in Germany (Siebelt, 2016). Taxi hailing apps have been banned in China (Wan, 2015), similarly the mandatory imposition of taxi meters led to Uber withdrawing from Denmark (McGoogan, 2017).

In London, Ubers successful appeal of its loss of licence to operate (Butler and Topham, 2017) illustrates the constantly shifting regulatory terrain. Not operating on the basis of being a taxi company also raises issues for the licensing of individual drivers. In some cases, such as Finland (Hinchliffe, 2016), Denmark (The Local, 2016) and New Zealand (NZHerald, 2015), this has led to Uber drivers being arrested and prosecuted for operating without the authority bestowed by a taxi licence. In Costa Rica (Pretel, 2015), Johannesburg (Burke, 2017) and Brussels (New York Post, 2015), Uber drivers have also been victims of abuse and even physical attacks by traditional taxi drivers who regard them as a threat to their livelihoods. In a number of cities around the world, including London, Paris and Rio De Janeiro, traditional taxi drivers have mounted protests and taken direct action, such as blockading city streets with taxis, in response to the arrival of Uber operations (Lee and Kelion, 2014; Tran, 2014; Specia, 2015; The Guardian, 2015).

The ambiguous legal status drivers occupy as independent contractors has been subject to challenge in a number of locations, notably Class Action suits in New York, California and Massachusetts, USA. Despite some rulings against Uber, settlements were reached allowing the continuation of the independent contractor status (Tracy, 2016). These settlements were subsequently subject to legal challenge on behalf of the drivers (Isaac, 2016). These rulings are representative of the many protracted legal challenges Uber has faced on an international basis (Fortune, 2016). As Wong (2017) notes:

Uber has long faced criticism over its treatment of drivers, which it considers independent contractors rather than employees. The classification of drivers as contractors allows Uber to avoid paying minimum wage or providing benefits such as workers compensation.

Trade Unions, and other collective bodies, have been at the forefront of campaigns highlighting the need for employment protection for Uber drivers. A GMB backed campaign in London led to a ruling by an Employment Tribunal (these are in effect courts dealing with employment relations issues) denying Uber the right to treat workers as independent contractors (Osborne, 2016). The tribunal dismissed Uber claims that they were a company offering a platform linking drivers operating their own independent businesses, 40,000 of which existed in London alone. In the UK context, the Employment Tribunal ruling has wider implications for the regulation of the employment relationship, notably for companies seeking to emulate the Uber model. As Rushforth (2017) notes:

The courts appear to be increasingly critical of arrangements that disguise workers as self-employed individuals Companies must consider carefully their contractor arrangements in the light of this trend, and decide if, and how, these should be amended to protect themselves from claims of worker status.

In a potentially momentous move, Barcelonas Asociacin Profesional Elite Taxi successfully took a case to the European Court of Justice, seeking clarification over the legal status of Uber, alleging it was running an illegal transportation service rather than a digital booking service. Beyond providing the basis for a ban on Uber operating in Barcelona, there are wider ramifications in terms of transnational regulation. The ruling in favour of definition as a transportation service now compels Uber to abide by EU safety and labour laws, in addition to transportation regulation within member states. A ruling in favour of being a digital service provider would have discharged Uber of coverage by transportation regulation and labour laws, plus allowed the company to benefit from EU regulation covering the freedom of movement of services. The European Commission are keen to push an agenda for the light touch regulation of digital services by member states, with the goal of promoting a single market for digital services. It should be noted that as a digital services provider, Health and Safety regulations could still have been applied to Ubers activities by member states, but this raises further questions over whether existing regulations would have afforded appropriate levels of protection to service users, equivalent to those covering users of traditional taxi services.

Even those that had supported a ruling in favour of Uber in order to avoid economy-crushing regulation and gain absolution from burdensome labour and licensing requirements of a taxi company, saw benefit in ending ambiguity through the establishment of an appropriate regulatory framework.

Competition is an important function of a healthy economy. So too is regulation: it provides the framework for healthy business, sets standards and ensures only fair advantages are gained in the market place. Companies shouldnt operate in a regulatory vacuum, neither should they risk degeneration at the hands of rules that are no longer fit for purpose. (de la Harpe, 2016)

Case study questions

1. What are the different regulation issues that the case of Uber raises?
2. What challenges do regulatory bodies such as licensing bodies and trade unions face in dealing with Uber? How should regulatory bodies respond?
3. In what different ways is the taxi driver employment status significant?
4. What are the various regulatory implications of the European Court of Justice ruling involving Uber?