Europe’s top court has ruled that Uber should be regulated as a transportation company — and not a tech firm.
The decision by the European Court of Justice is a major setback for Uber, which has long insisted that it should be treated as technology service that connects drivers and riders.
The court rejected that argument in its landmark decision, ruling that Uber is at its heart a transportation company and should be regulated as such.
Uber could now be subjected to the stricter licensing requirements that apply to traditional taxi operators. The startup could also eventually be asked to collect new taxes from customers.
The ruling, which cannot be appealed, could have major implications for other companies that operate in Europe’s gig economy. The upstart firms have typically faced lighter regulation than their traditional rivals.
“What the judgment does show is that it’s not a brave new world for the gig economy,” said Rachel Farr, a senior employment lawyer at Taylor Wessing. “The law applies to them all.”
Uber said in a statement that the ruling would “not change things in most EU countries where we already operate under transportation law.”
But it could limit the company’s ability to use drivers who do not have professional licenses — a service currently offered in only a few European markets.
The Uber case was brought by professional taxi drivers in Spain who argued that the startup had an unfair advantage because drivers on its UberPop service didn’t have the taxi licenses required by the city of Barcelona.
A Spanish court referred the case to the European Court of Justice.
Farr said the ruling could open the door to more expensive Uber rides in Europe, because the company could eventually be required to collect sales taxes from consumers.
The taxes had previously gone uncollected because Uber drivers — who are classified as independent contractors — were too small to be registered for the tax.
“This would immediately increase the cost of fares by 20%,” said Farr.
Uber has been embroiled in a number of controversies in 2017.
Travis Kalanick stepped down as CEO in June following allegations that managers didn’t adequately address reports of sexual harassment.
In September, London announced it would not renew Uber’s license because of concerns over its approach to reporting serious crimes and other issues. Uber is allowed to operate in the city while it appeals the decision.
In a separate U.K. case, an employment tribunal ruled earlier this year that Uber drivers should be treated as workers and not contractors. That means they would qualify for the minimum wage, paid time off and other perks.
Uber has also appealed that ruling.