Uber suffered a setback to its global expansion plans Thursday when a senior adviser to Europe's highest court recommended that the ride-hailing company comply with the region's tough transportation rules, potentially hobbling growth of its service across the Continent.
The non-binding opinion comes as Uber faces growing pressure worldwide after a string of missteps by its executives angered regulators and raised questions about the leadership of Travis Kalanick, the company's chief executive.
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How Uber's controversial CEO built an empire
The story of Travis Kalanick and how he went from UCLA dropout to CEO of the world's most valuable technology startup, Uber.
The European case centres on whether Uber should be considered a transportation service or a digital platform that merely connects independent drivers and potential passengers. By designating Uber a transportation service, Maciej Szpunar, an advocate general at the European Court of Justice in Luxembourg, said Thursday that the company should comply with European countries' safety rules, as well as with other legislation that applies to the traditional taxi associations that are Uber's main rivals across the region.
"Uber cannot be regarded as a mere intermediary between drivers and passengers," Szpunar wrote in an opinion that will be reviewed by the European Court of Justice, which is expected to make a final ruling by late summer.
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"It is undoubtedly transport which is the main supply and which gives the service meaning in economic terms," Szpunar added. "The service amounts to the organisation and management of a comprehensive system for on-demand urban transport."
The opinion represents a bloody nose but not a full knockout for Uber in its ongoing fight in Europe, a region still crucial to the company despite rapid expansion in emerging markets like India. Uber has gained traction across the Continent, despite some restrictions or outright bans on some of its services, including on UberPop, its low-cost offering.
The European Court of Justice typically follows the recommendations of its senior advisers, but it may still rule in the company's favour.
Uber has doggedly defended its right to operate freely across the Continent, telling Europe's highest court in November that it was helping the region's digital economy grow and that it should not be regulated like traditional taxis.
In many European cities, the ride-hailing company already operates services that comply with existing transportation rules that apply to rival taxis. But some of Uber's other services, particularly those that do not require drivers to acquire a government-backed taxi license, have been banned in certain countries, notably in France where local opposition to Uber has often turned violent.
"Being considered a transportation company would not change the way we are regulated in most EU countries," Marloes van der Laan, an Uber spokeswoman, said in a statement Thursday. "It will, however, undermine the much-needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride."
The case stems from a complaint brought in 2014 by a taxi group based in Barcelona, Spain, that said Uber was unfair competition because it did not have to comply with the same rules while operating in the city.
"Uber is a company whose main activity is transportation," said Montse Balague, a lawyer for the Spanish taxi association that filed the original complaint, in an interview Thursday. "Justice is done. We agree 100 per cent with the advocate general's opinion."
In a separate case referred to that court by a French judge, Uber again defended its position as a digital platform last month after a French law clamped down on illegal taxi services. Two Uber executives fell afoul of that law last year, and were fined. A ruling in that case also is expected later this year.
The European rulings come as Uber has faced accusations of wrongdoing, including an inquiry by the U.S. Department of Justice into whether the company broke the law by deploying essentially a fake version of its app to evade law enforcement. The company denies the accusations.
Uber has also been accused of sexism in the workplace, and there have been calls for Kalanick to step down after his tirade against an Uber driver was caught on video. Such issues have raised concerns about the company's eye-watering valuation of nearly US$70 billion, making it one of the world's most valuable privately held technology companies.
The New York Times