Uber: Unregistered Transportation Company or Online Platform Pioneer?

Uber: Unregistered Transportation Company or Online Platform Pioneer?

By Paula Hock

Founded in 2011, Uber has since grown its ridesharing app operation to 570 cities worldwide, inspired similar startups like Lyft, and launched a food delivery app in addition to its original. It’s no surprise that the company has fought a variety of legal and regulatory battles as one of the first apps of its kind, but few people realize the fundamentals of the regulatory battle or just how many battles Uber is facing.

Company Definitions and Legal Battles

Uber, since its inception, has characterized its drivers as “contractors” rather than “employees” and maintains that it is an online platform to connect independent drivers rather than a taxi service regulating its operators. These definitions have been at the center of several legal issues for the past several years.

For regulation and security, most cities require taxi companies to perform background checks for their drivers via fingerprinting. However, Uber doesn’t require fingerprint checks, instead they screen drivers using their name and social security number. This poses a safety hazard, and has already had several lawsuits come to fruition, like the one in San Francisco and Los Angeles on terminology and the legal battle around Austin’s fingerprint regulation.

Beyond these issues, Uber’s standing as an online platform with contractors protects it from several taxes and fees, both from the government and for its employees. In fact, among the numerous class action suits filed by employees is one accusing Uber of misclassifying employees for the purpose of not providing benefits.

The battles have also recently moved to Europe. On May 11, it was recommended to Europe’s highest court that the company should be regulated as a transportation company, not as an online platform. While not binding, it certainly bodes poorly for the company in its case later this year. This comes after several battles with taxi companies and regulators that have resulted in at least partial bans in places like Italy, Germany, Belgium, the Netherlands, Spain, and Hungary. Being classified as a transportation company would open it to heavy regulatory loads and strict licensing requirements across Europe.

More Challenges

Beyond regulatory hurdles and class action lawsuits, Uber is facing continual uphill battles. Recently, the US Justice Department launched a criminal investigation in connection with the use of Greyball software, which Uber used to track down sting operations on their drivers. While Justice Department investigations are not unusual for high-profile companies, at this point it appears to be icing on a very problematic cake.

Uber is also being sued by Waymo, which is a subsidiary of Alphabet (Google parent), for its recent acquisition of Otto, a self-driving truck company. Waymo alleges that a former Google executive stole self-driving car technology and used it to start Otto.

A Bleak Horizon

Combine these legal battles with a variety of others, including charges of widespread sexual harassment made by a company engineer and a video of verbal abuse from the CEO toward a driver, it appears that Uber is certainly not out of the woods. It’s likely that they’ll face additional challenges in the coming months.

The question remains: is Uber an online platform connecting riders and drivers or a high-tech taxi company? It appears that this question will continue to be fought over for some time, but it’s likely your perspective will be dictated by which side of a court case you may find yourself one day.

Image courtesy of pixabay.com

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