The Grinch has come early this Christmas for the already beleaguered Uber: the European Court of Justice (ECJ) has ruled the firm a transport services company, essentially forcing the San Francisco company to accept stricter regulation and licensing within the EU in line with other taxi operators. While the ruling is seen by many as a vote to protect the EU’s global image as a bastion of consumer protection in the technology sector, the European Commission (EC) has a less than stellar track record in the field. And despite the hype, this week’s decision does not bode well for Europe’s digital single market (DSM).
The ruling made in Luxembourg, following a challenge brought by Barcelona taxi drivers, will apply across the whole of the EU. Despite Uber’s insistence at its being an “information society service”, a mere intermediary working on behalf of drivers, the Commission’s ruling will require the firm to radically improve working conditions and wages for drivers on its platform in Europe- and may ultimately undermine Uber’s defense arguments in parallel legal actions.
The ruling is considered a victory for consumers, following a years-long battle between Uber and EU taxi associations that claimed the firm evaded European transport rules and presented unfair competition in the marketplace- allegations the American tech company denies. By providing transportation services without first possessing a license to do so, the Uber business model was determined to undermine consumer protections; Brussels’ decision this week has been praised for putting the brakes on unlicensed services, in stark contrast to the American approach of blindly facilitating tech firms.
This is not the first time European courts have clashed with the Silicon Valley’s finest exports: Apple Inc fell out with Ireland over a 2016 ruling to pay $15 billion in back taxes, Google faces a record $2.8 billion fine over shopping ads, and Facebook and Twitter face inquiries over their perceived failure to control hate speech. In Paris, regulators are cracking down on Airbnb– determined to regulate the home-share website as if it were a hotel.
Nonetheless, such assessments ignore an obvious double standard in Europe’s treatment of the technology sector: the Commission has shown itself to be recklessly careless on customer protection in other industries of the tech sector, particularly online gambling. Just this month, the EC closed all pending infringement cases against member states whose online gambling regulations violate EU law, saying it is “not a priority” for the Commission to use infringement powers to promote an EU Single Market in the industry. In November this year, Parliament passed the new Consumer Protection Regulation, allowing national consumer authorities to order ISPs, web hosts and registries to block or delete websites. In both instances, the EU’s position regarding the future growth of the tech sector is murky at best.
The Commission’s decision to close the aforementioned infringement cases has been highly criticized, with the Remote Gambling Association (RGA) declaring the decision to be “highly questionable”. The Commission’s hands-off approach leaves the market precariously unregulated and countries dangerously unprepared to protect customers in an industry with challenges that arguably cannot be enforced on a national level. The result, the RGA says, is leaving consumers exposed to fraudulent or non-EU gambling sites.
The island nation of Malta is one notable exception: the Malta Gaming Authority (MGA) published this year a White Paper proposing major new reforms to streamline the country’s legal framework, as Valletta attempts to pivot toward the digital sphere. Among the many proposals, the White Paper widens MGA consumer protection powers to ensure the stability of an industry set to reach €24.9 billion in revenue by 2020.
This year’s Uber ruling and hands-off policy on online gambling have wider implications for the Digital Single Market in terms of the EU’s Consumer Protection Cooperation rules. Where the DSG wants to allow better access for businesses and consumers to online goods and services across Europe, the Uber ruling is to have an immediate detrimental impact on Uber’s European operations. Similarly, the EC’s disinterest in gambling could very well send a multi-billion euro industry with high growth rates packing. The two developments will most definitely have a chilling effect on other start-ups seeking to capitalize on tech’s power to create and fulfill consumer needs better and faster than before.
While the rulings do not fracture per se the DSG – as they are applied everywhere in the EU – they do raise the question of what kind of market is Brussels engineering. If the purpose is to stymie innovation, then the Commission is on the right track. If, however, Europe wants to mount a serious challenge to Silicon Valley giants, taking an axe to the gig economy and online gambling is the quickest way of making sure the Old Continent stays behind the curve.