If you’re in Brussels and you try to order a ride using the Uber-app, you receive the following message: There are no cars available. Discover why. A link then invites you to share Uber’s petition to protest its recent ban in Belgium.
UberPOP, Uber’s most popular service, was recently banned by a Brussels court, despite overwhelming support from the public, of which only 7% say they support the ban. The Belgian court’s decision followed similar rulings made by regulators in several EU countries including Germany, France, Italy and Spain. Yet Uber won a case last week, when a UK court ruled its app to be legal in London. This lack of consistency across Europe creates overall confusion and legal uncertainty not just for the company, but also for its thousands of customers.
Should the EU get involved?
Uber reacted to the national bans by filing several complaints with EU-regulators. The San Francisco-based company claims it is being discriminated against and that France, Germany and Spain are in violation of article 49 (freedom of establishment) and 56 (freedom to provide services) of the Treaty on the Functioning of the EU, as well as the e-commerce directive and the EU Charter of Fundamental Rights.
National regulators themselves aren’t sure whose job it should be to regulate Uber. In July, a Spanish court asked the European Court of Justice (ECJ) to rule on whether the company should be considered a transport company or a digital service (Uber claims to be the latter). The Luxembourg court was also asked to rule on whether the Spanish ban was lawful, given that Uber is registered in the Netherlands, another EU country.
The ECJ’s verdict will undoubtedly set a major precedent. If the Court sides with Uber, it will become much harder for national regulators to curb its activities. However transport policy - including taxi regulation - is generally dealt with at Member State level.
A new way of doing business
The whole Uber debacle has made two things abundantly clear regarding digital services in the EU. First, our current regulations are outdated and unable to cope with today’s technological innovations. Second, our current system of 28 different national regulators is not compatible with the EU’s single market.
The European Commission acknowledged that action was needed at EU level to achieve a single market for digital services in Europe and adopted a Digital Single Market strategy last May. The main objectives of this strategy are tearing down regulatory walls, moving from 28 national markets to a single one but also creating a level playing field for digital networks and innovative services to flourish.
Uber is one of those innovative - and disruptive - services but it is merely one example of the growing revolution that is the sharing economy, which according to Internal Market Commissioner Elzbieta Bienkowska, is estimated to be worth €10 billion in Europe and forecasted to grow to €250 billion in the next decade.
There are more examples of disruption than just the transport sector. The hotel industry for instance, has been shaken up in recent years by Airbnb and the rise of the sharing economy. On another level, the online travel agencies (OTA’s) such as Booking.com, Expedia or HRS have anticipated and answered consumer behavior while the traditional industry did not tackle the changes in time. The OTA’s have also often been met by stiff opposition from the traditional players.
It is of course perfectly normal for disruption to face opposition. But Europe simply cannot turn its back on innovation. Or to use the words of Commissioner Bienkowska: “This is a new way of doing business. We need to align with this, not fight it.”
A key lever
Policymakers should indeed recognize that these disruptive innovators do not share the same business model as the incumbent industries. The challenge is therefore to create this level playing field across Europe so that innovation can still thrive while at the same time ensuring that the established industry can compete on fair grounds. One way of achieving this could be by reducing existent regulations and costs, in order to facilitate competition.
One thing is certain; today’s divergent national approaches are a source of insecurity and legal instability for all actors, traditional and disruptive, as well as industries that are linked to the digital economy such as the transport and tourism sectors. Let us also not forget the EU’s consumers, who stand to benefit immensely from a digital single market that protects their rights and encourages them to buy goods and services across borders.
Bringing down the barriers to a EU Digital Single Market is the only way to, not only create stability for every actor involved, but also translate these innovations into substantial economic growth. It is a key lever so that tomorrow we could see the rise of a European Google, a European Facebook or a European Uber and perhaps most important of all, it is the best service the EU could offer its consumers.