European Countries Face an Uber Problem

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European Countries Face an Uber ProblemUber, the ride sharing service that has taken the planet by storm, has become a worldwide problem. It is not a problem for the service’s customers, who love the idea of being able to summon a ride with a smartphone app and be whisked away to where they need to be at a reasonable price, in a clean, smoke-free vehicle driven by a courteous driver who does not have to be tipped. It is not a problem for the drivers, who love the extra income they can earn just by taking people where they need to be. It is a problem for various governments, as well as taxi driver unions, who are grappling with the realities of the sharing economy, enabled by the Internet revolution.

While government entities such as the Seattle city council wrestle with how to bring the service to heel, sometimes with extralegal means, the reaction in Europe has been much worse. In Paris, recently, taxi drivers rose in mob violence, physically attacking cars suspected of belonging to Uber drivers, Taxi drivers stopped traffic and otherwise engaged in lawless behavior against the company that was taking away their business. The French government, perversely, reacted to the violence by cracking down, not on the rioting taxi drivers, but on Uber. Uber cars were seized. Uber executives were arrested.

The sad fact of the matter is that Uber and similar services face a host of legal and regulatory hurdles in countries of the European Union. Most European countries regard Uber as a taxi service and therefore subject to rules and regulations that would likely destroy its business model and its competitive advantage over more traditional taxi services. Uber is suing in the European Court of Justice to overturn those laws and regulations on the grounds that they violate European Union treaties. Uber contends that it is not a taxi service, but rather an online information service that matches willing drivers with customers.

The EU Commission has launched a study that will attempt to resolve the question once and for all. If the commission decides that Uber is an internet information service, European governments will be hard pressed to stop the company from penetrating European markets and disrupting an economic order that has adhered for many decades. More traditional taxi services will have to adapt to the new competition or die.

The sharing economy extends to just more than being able to get someone to take one to the store or to a business meeting. Sharing companies that match homeowners willing to rent rooms to travelers or match doctors willing to make house calls to patients willing to pay for the service are sprouting up all over the planet. Just as in America, European countries will be faced with a stark choice. Do they embrace the sharing economy, with all of its promise and peril? Or do they try to stop it before it upends the comfortable and familiar economic order? The choice will shape society for the foreseeable future.

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