Uber, the EU, and regulation

 

If it quacks and walks like a duck, chances are good it’s a duck. The EU just said Uber is a duck, ah, a “transportation service” not a digital service. Uber, and other ride share services, premised their existence on being not a physical taxi service but a digital service that helped people find ride services from individuals using their own vehicles. They did this to get away from the rules and regulations and fees and taxes taxi services are forced to pay and abide by.

Cities, states, and nations have a duty to protect its citizens, but from what? Protection services quickly become bureaucratic with layers of rules and regulations supposedly designed to make a company safe to use but costly to the company itself (and by way of that to customers on whom those fees are passed on) and restrictive based on government’s idea of how it should act versus what the company designed itself to be.

Information services over the internet like Google can be classified as purely digital services. In essence they are a library service and everything stays on your digital device, unlike Amazon that doesn’t connect you with a seller for a physical products (much like its e-reader service), it for the most part houses products you purchase, packages them, and ships them to you. If they act like a brick and mortar store should they be liable to the same rules and regulations governing retail stores. Honestly, cities and states are looking for money, how they can take your money for themselves, with all the justifications, of course, for why they need your money. And you get protection from businesses that might prey on you in evil ways. Cities and states are trying to determine how they can tax what you purchase over the internet that comes from out of state skipping state taxes.

Uber has successfully, until now, stayed out of the rules and regulations and fees and taxes imposed on taxi services because they defined themselves not as a physical taxi service, just a digital service to help you find a ride, for a fee, of course. To back this up Uber doesn’t own the transportation vehicles, those belong to the person who is not an employee of Uber but who rent out their vehicle and themselves to drive it using Uber as a way to provide this transportation service. Simple idea, simple service.

The problem here is, Uber cannot simply be a digital service. To have any credibility for their service that a reliable person will transport you from A to B for a reasonable fee Uber has to ensure both the vehicle and person driving it that they are safe and reliable for you to trust Uber enough to use their digital service to contract for transportation. And not only do you contract for this service though your digital device, you pay Uber who then pays the driver for hauling you around.

Natalia Drozdiak in her Wall Street Journal article, “Uber Dealt Blow as EU’s Top Court Rules It Is a Transport Company: Judgment by ECJ is a defeat for ride-hailing firm’s efforts to use courts to lighten its regulatory load, writes this: The court’s finding—ruling against Uber’s argument that it was simply a marketplace to connect people who want services—could also undermine similar arguments that many Silicon Valley firms make to keep regulators at arm’s length around the world. Airbnb Inc., for instance, has declined to proactively filter some types of listings in Paris in part because it says it is a technology platform, not a housing provider.”

The attraction of digital services like Uber is that they are more innovative than traditional businesses because they are free from heavy regulatory pressures and have more money to invent new and better services. It’s cheaper for the one using their service, and easier to use it. And for the one providing the service it’s more money in their pocket, not taken from them for rules and regulations and fees. Everyone wins, except the traditional services that finds it hard to compete with internet services.

If the state forces digital services into the rules built for the old system, much like businesses wanted to slow down and stop the industrial revolution because it was changing the nature of business, there will be no winners. But like the industrial revolution proved greater than the state to regulate it greater than needed the progress of the digital age changing everything won’t be stopped, and shouldn’t be stopped.

It’s a fine line we walk but I don’t believe the EU, in finding for more restrictive regulation, really benefits the citizens of Europe. To read the complete article from the WSJ you can go HERE.