Uber’s position in Europe is generating more heat than light. Ostensibly, the question seems to be whether Uber is essentially an information service that matches people offering a certain thing (driving you from here to there) with people who want that thing, or whether it is a transport service like a taxi company.
The parties favoring the two sides of the argument follow predictable lines to a great extent. But the degree to which Europe is at odds with itself shows that Uber is an exemplar of a much larger series of questions and debates, to which there are no clear answers.
In the last few months, a series of demonstrations and disputes—often violent—have occurred in major cities in Western Europe. In some instances, Uber drivers have been attacked. In May, a demonstration in London (where Uber is legal) by hundreds of black-cab drivers brought traffic to a standstill, and did not generate a great deal of sympathy for the cabbies. Protests in Paris became violent, although there was a modicum of comic relief when Courtney Love Cobain got caught in a taxi and was rescued by two bikers.
Uber’s Uberpop service (the European version of the ridesharing app that connects customers to unlicensed drivers) has been banned in France since January. The app has been banned in Germany twice already, and banned in both Spain and in the Netherlands. The company’s headquarters have been raided in Amsterdam. Perhaps most astonishing, in late June the two most senior Uber executives in France were arrested and held overnight for conspiring to organize illegal work, and then ordered to stand trial for misleading commerce practices and complicity in the illegal exercise of the taxi profession. The prospect of a fair trial was probably not improved by the swift condemnation that French President François Holland visited on the company—obviously to curry favor with politically important parties.
The battle lines can thus be drawn: between the incumbents (taxi drivers) and the innovators (Uber, Lyft, and the like); between the EU “centrists” and those who want more local control (analogous to “states’ rights” proponents in the U.S.); and between those who favor disruptive change and those who want to preserve the status quo. But these elements all interlock in complex and sometimes counterintuitive ways.
The issue for many incumbents is essentially unfair competition. For example, in Germany, taxi drivers must meet the demands of extensive regulations, including liability insurance, fixed fares, health checks, and a taxi license that can cost as much as €240,000. Uber drivers do not face any of this. Licensed taxi drivers in France claim to have lost between 30 and 40 percent of their income in just two years because of Uber.
Uber longs to be regulated at the European Union rather than the national level, and was cheered by the recent ruling of a Barcelona judge who referred an Uber case to the EU’s highest court. It was further cheered by the decision of the EU Commissioner for Transport to engage an in-depth study into the potential need for further action at the EU level and what such action might entail. The commission has cited general principles of EU law, such as freedom of establishment, proportionality, and non-discrimination, and some of these may work in favor of Uber.
Not only do regulations now vary between EU member states, but they can also vary from one city to another within the same state. For example, Uber is banned from making a profit in Berlin, Dusseldorf, and Hamburg. The creative response from Uber—which has hired David Plouffe, who masterminded Barak Obama’s 2012 reelection campaign, as head of its public policy team—was to cut fares to the extent that it is impossible for Uber drivers to make a profit in those cities.
The debate between the advocates and opponents of disruptive change is perhaps the most central element in this dynamic, even if it is the most indirect. Uber claims that it can simultaneously improve lives, save many citizens from the necessity of owning cars, reduce carbon omissions, and create jobs. The argument on the other side is that, while consumers may gain from the kind of disruptive change Uber represents, workers do not. Virtual platforms that in essence “auction” work to pools of contractors offer the equivalent of stagnant median wages at best, and no wages at all at worst.
And then there is the specter of robots and automation, which inspires either anticipation of a brighter future or horrific existential fear (and, it seems, not much in between). Many high-tech firms are working on varieties of artificial intelligence, which may allow at least some of the work done by doctors, lawyers, and accountants to be done by machines. With this in mind, Uber has recently announced a new strategic vision that represents disruption with a vengeance. It has launched the Uber Advanced Technologies Center in Pittsburgh, whose main mission relates directly to driverless cars. According to Uber, the majority of the costs of any ride stem from the person behind the wheel. Not only does Uber aspire to eliminate taxis, but, with its eventual fleet of driverless cars, to eliminate Uber drivers as well. And if such a system could be made to work (which is more than a little in question at the present time), it could eliminate car ownership almost entirely, if it indeed provides an alternative that is cheap enough and reliable enough. Needless to say, despite the efficiencies that eliminating the need for an expensive asset that sits idle most of the time would generate for consumers, it is a nightmare scenario for car manufacturers, who could lose much of their market.
In a way, this kind of debate—and the violence that goes along with it—is nothing new. While the music industry may be the poster child for the corrosive effects of recent disruptive change, increasingly rapid technological advances since the Renaissance have repeatedly led to protests from those being replaced or fearing obsolescence. Luddites were workers in England who, in the second decade of the 19th century, violently protested against newly developed labor-saving technology, principally but not exclusively in the textile industry. One etymology proposed for the word “sabotage” is that it comes from the wooden shoes, known as “sabots,” that workers in the Netherlands during the 15th century would fling into mechanized looms, hoping to break the cogs because they feared the consequences of the new automated machines. And so forth.
An essential variable in this equation is the extent to which a society is willing to tolerate risk, and it is here most of all where Europe’s internal divisions become problematic. The EU services directive is a contentious piece of legislation that is supposed to liberalize markets and dislodge the protectionist stranglehold that so many member nations exercise. The new European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, Elżbieta Bieńkowska, has been clear in her intention to enforce it throughout the union, and been outspoken in her support of technology groups like Uber, Airbnb, and Google, arguing that Europe cannot fight economic modernization and shouldn’t try.
But, besieged as they are by internal tensions, rapidly rising economic instability, high unemployment, immigrant and refugee problems, social unrest, and hot war on Europe’s borders, will European leaders collectively muster the nerve to stare down a vocal, well-organized, and politically influential group such as taxi drivers? Or will they choose short-term political gain over long-term pain, and simply let the process drift on to its apparently obvious conclusion? If so, it will arrive further down the road—and ultimately with even more pain—than necessary.