Uber: the Future of Work… Or Just Another Taxi Company?

Things haven’t been going well for gig economy flagship Uber in recent months, from political controversy to sustained allegations of disturbing sexism. Legal trouble have been mounting, too: last autumn, the London employment tribunal agreed with drivers that they were employed as Uber’s workers – and now the Court of Justice of the European Union is poised to join the fray: on May 11, 2017 Advocate General Maciej Szpunar handed down his long-awaited opinion in Case C-434/15 Asóciacion Profesional Elite Taxi v Uber Systems Spain SL.

Legal Background

At first glance, the question before the court is fairly dry and technical: is the self-styled ‘ride-sharing’ platform an ‘information society service’ for purposes of the EU’s electronic commerce directive? The dispute arises from a series of claims brought by Elite Taxi, a Barcelona Taxi Drivers’ lobby group, against UberPOP, a low-cost transportation service operating without ‘the licences and authorisations required’ by local law [16].

The Advocate General notes ‘some confusion’ as regards the detailed claims; the essence of the argument can nonetheless be summarised relatively easily: if Uber’s entire operations count as an ‘information society service’ for purposes of Directive 2000/31/EC, individual Member States’ regulatory powers will be severely hampered: subject to narrow derogations, national laws could not ‘restrict the freedom to provide information society services’ (Art 3(2)).

The implications of this question are far-reaching: the case goes to the very core of Uber’s business model. Does the hugely popular platform provide transportation services – or is it merely in the business of introducing consumers to independent ‘driver partners’? The stakes are high – and the Advocate General’s answer is clear: Uber is ‘a traditional transport service. Whether or not it is regarded as forming part of a “collaborative economy” is irrelevant to its classification under the law in force.’ [42]

‘Information Society’ or ‘Transportation’ Service?

The crucial question for the Court, AG Szpunar notes, is whether Uber’s services are provided at a distance by electronic means’ [28]. This won’t be the case if the app is merely ‘incidental’ to the provision of transport services [31]. He draws a very useful distinction between ‘platforms for the purchase of flights or hotel bookings’, where the platform ‘remains economically independent since the trader pursues [her] activity separately’ [34] and a provider who ‘exercises decisive influence over the conditions under which … the service is provided’ [35].

On which side of this divide does Uber fall? The Advocate General turns to judicial and academic analyses of gig economy platforms ([39]ff) to inform his conclusions – including the London Employment Tribunal’s decision in Farrar v Uber (discussed here with Rachel Hunter) and my recent article on whether Uber, TaskRabbit & Co should be identified as employers, as written up in this blog last year. His conclusion: Uber is ‘a traditional transport service. Whether or not it is regarded as forming part of a “collaborative economy” is irrelevant to its classification under the law in force.’ [42]

This finding stands in stark contrast with Uber’s submissions, repeated in lawsuits around the world: the platform ‘claims that it simply matches supply (the supply of urban transport) to demand’. This, AG Szpunar finds, ‘is an unduly narrow view of its role. Uber actually does much more than match supply to demand’. [43] His detailed analysis mirrors recent findings by Rosenblat and Stark on the platform’s sophisticated mechanisms of indirect control: ‘without exerting any formal constraints over drivers, Uber is able to tailor supply to fluctuations in demand’ [47].

The Advocate General takes particular umbrage with Uber’s assertion ‘that drivers are, in principle, free to ask for a lower fare than that indicated’, questioning whether this is ‘a genuinely feasible option for drivers’ [50]. Last year, when confronted with similar, ‘grimly loyal’, evidence from Uber, the London Employment Tribunal resorted to Shakespeare in noting that ‘the lady doth protest too much’. AG Szpunar agrees: ‘one should not be fooled by appearances’ [52].

Uber, he notes, cannot ‘be treated as a mere intermediary between drivers and passengers. Drivers who work on the Uber platform do not pursue an independent activity that would exist independently of the platform. On the contrary, the activity exists solely because of the platform, without which it would have no sense’ [56]. Reliance digital technologies cannot change the underlying business reality:

Uber is therefore not a mere intermediary between drivers willing to offer transport services occasionally and passengers in search of such services. On the contrary, Uber is a genuine organiser and operator of urban transport services in the cities where it has a presence. While it is true, as Uber states in its observations in the case, that its concept is innovative, that innovation nonetheless pertains to the field of urban transport. [61]

As a result, the Advocate General concludes, the digital elements of Uber’s product are ‘inseparable’ from the provision of transport services ([63]) – the platform ‘must be classified as a “service in the field of transport”.’ ([71])

Broader Implications

AG Szpunar is rightly careful to emphasise that his conclusions are confined to the questions of EU law at stake. His findings nonetheless have important implications for at least three related – and equally contentious areas – of law, at least some of which may in due course come before the Court of Justice.

Employment

Courts and tribunals across the world have struggled with the question whether Uber’s drivers are independent ‘partners’ or employees. The opinion scrupulously avoids this question, noting that employment law ‘is wholly unrelated to the legal questions before the Court’ as the ‘company may well provide its services through independent traders’ ([54]). While the latter point is technically correct, it cannot (with respect) support the ultimate conclusion: as I argue in my forthcoming book on work in the gig economy (Humans as a Service, OUP) the tight control so accurately highlighted in this opinion is a clear pointer towards employee status – though that question is of course one for national law to determine.

Competition & Tax Law

AG Szpunar is more explicit when it comes to questions of competition law: ‘classifying Uber as a platform which groups together independent service providers may raise questions from the standpoint of completion law’ [62]. For more details, see the work of my Oxford colleague Ariel Ezrachi, as cited by the Advocate General. As regards tax law, finally, the classification of Uber as a service provider might also have significant implications for on-going debates as to whether the platform should pay VAT – as other transportation services providers have to.

@JeremiasPrassl is an Associate Professor in the Faculty of Law, a Fellow of Magdalen College, and a Research Fellow of the Institute of European and Comparative Law at the University of Oxford.