Ever since its inception, Uber has been at loggerheads with the governments to have itself classified as a technology company -- an intermediary which connects passengers looking for a ride to drivers providing it. There are major conveniences to such a classification. Uber is thereby a mere ‘intermediary’, or an app, subject to internet laws. This way, the extremely stringent, and expensive, taxi regulations are inapplicable to them.
Governments, however, are not in agreement with Uber’s stand. Most recently, the EU Advocate General has opined that Uber is a transportation company, and not a technological company. Given in an ongoing case before the European Court of Justice, this adds to a long series of setbacks for Uber this year, starting with the #deleteUber campaign, the sexual harassment allegations, the Greyball incident, and more recently a fight with Google over its self-driving cars. While this opinion is not binding on the European Court, there is a likelihood of the court accepting it.
Understanding Uber’s claim
Uber’s claim that it is a tech company can be best understood when compared with another service app like Zomato. Consider the difference between ordering a KFC burger from the Zomato app, and from the KFC app itself.
Here, Zomato is responsible for connecting the customer with providers of food, like KFC, but Zomato is not responsible for, say, the quality of the food provided. That responsibility remains with KFC. Zomato is, thus, a tech company.
However, in the case of the KFC app, the app is not a mere tech company, but a food service company operating through the internet.
Uber as a transport company
Uber’s claim would make sense if, for example, like Zomato, its role was limited to connecting passengers to other taxi services like Ola, Meru and so on. Uber would play no role in the quality of the service provided, the fares charged, the security of the drivers and so on. That responsibility would remain with Ola, Meru and so on.
In practice, Uber functions differently. The EU Advocate General found that Uber was not a mere intermediary, but was instead a genuine organiser and operator of urban transport services. Several features of Uber’s functioning led to this conclusion -- the fact Uber defines the conditions for drivers to take up work with Uber, financially rewards its drivers, exerts control over the quality of the drivers’ work and even determines the price of the service.
Despite Uber’s claims, its role is thus hardly as neutral as that of an app connecting service providers to consumers. It is, instead a company which hires drivers and regulates the service provided by them.
Drivers don’t need to be independent taxi service providers to provide services on Uber. In fact, through services like UberPop, even drivers without a commercial license were providing services.
Taxi licences can cost $1 mn
Taxi regulations the world over are extremely stringent. There are a number of requirements prescribed before the licence to operate taxi services is even provided -- such as a minimum number of taxis, hiring of drivers with commercial licences and commercial insurance, minimum fares, driver background checks, etc. Licences are also extremely expensive, for example, a taxi medallion, or a licence to operate taxis, in New York reportedly costs more than $1 million.
Uber not a ‘taxi service’
A service like Uber, however, does not fit into the traditional definition of a ‘taxi service’. For example, Section 19-502(l) of the New York Code defines a ‘taxicab’ as a vehicle which is permitted to accept hails from passengers from the street. Clearly, Uber does not accept it hails from the ‘street’, but instead accepts hails electronically.
However, instead of considering itself to be an innovation in the transportation industry, Uber has long since been calling itself a mere ‘technological platform’. Even today, its Terms and Conditions state this:
‘The Services constitute a technology platform that enables users of Uber’s mobile applications or websites provided as part of the Services (each, an “Application”) to arrange and schedule transportation and/or logistics services with independent third party ….YOU ACKNOWLEDGE THAT UBER DOES NOT PROVIDE TRANSPORTATION OR LOGISTICS SERVICES OR FUNCTION AS A TRANSPORTATION CARRIER ….’
Consequences of non-compliance
The consequences of Uber’s non-compliance with taxi regulations have been faced not only by traditional taxi services the world over, but also by passengers. While traditional taxi services were unable to compete fairly with Uber largely due to the taxi regulations which bind them (such as a minimum fare to be charged), passengers faced compromises with their security.
Many of the taxi regulations are also designed to protect passengers, for example, the requirement of driver background checks verifies that the drivers have no previous criminal records. Commercial driving licences also require a much higher skill of driving than personal licences. One outcome of this non-compliance was seen in India, when a 25-year-old woman was raped by Shiv Kumar Yadav, a driver who was out on bail for a previous rape, but was hired by Uber without proper background checks.
Uber’s consequent non-compliance with taxi regulations led to legal action including bans, suspensions and fines in a number of places around the world, including San Francisco, Massachussets, New York, Taiwan, Canada, France, Spain, Germany etc. Uber has also been sued by taxi unions in various countries for its non-compliance.
Change the stance
Countries have taken different approaches to dealing with Uber, with some making it comply with existing taxi laws and others creating new laws specifically for it (like California’s ‘transportation network companies and Karnataka’s ‘on-demand transportation aggregators’). While solutions are different, there is uniformity in the attitude of these countries -- they are clear that Uber is not a ‘mere’ technological company’.
There is no doubt that Uber’s innovative service has revolutionised taxi services. However, its attitude towards laws is only affecting its own reputation. The company needs to change its stand, accept that it is a taxi service, albeit an innovative one, and take on the responsibilities that come with it.
Updated Date: May 16, 2017 18:09 PM