Bad News, Uber: EU Court Says You’re a Taxi Company

Ride-hailing service Uber suffered a new blow Wednesday as the European Union's top court ruled that it should be regulated like a taxi company and not a technology service, a decision that crimps its activities around Europe and could weigh on other app-based companies too.

Taxi drivers honked in celebration while Uber -- which is wrapping up a particularly punishing year -- sought to play down the ruling Wednesday by the Luxembourg-based European Court of Justice. The decision might only affect its operations in four countries, and the company said it will try to keep expanding in Europe anyway.

The decision in theory applies to ride-hailing services around the 28-nation EU. But the ruling leaves it to national governments to decide how and whether to change the way they regulate Uber and similar services, which have expanded rapidly in recent years.

Uber has gained a strong foothold and customer base in most European countries, adapting its multiple services time and again to bend to local rules when faced with legal challenges. In many places its hallmark "peer-to-peer" service is already banned, and instead Uber's services are much like taxis, just more flexible and sometimes cheaper.

But many taxi drivers saw Wednesday's court decision as an important symbolic victory. And some other internet-based businesses fear it could pave the way for other new regulation, as European authorities look for ways to regulate companies that operate online and outside traditional sectors and don't fit in with existing laws.

The decision stems from a complaint by a Barcelona taxi drivers association, which wanted to prevent Uber from setting up in the Spanish city. The taxi drivers said Uber drivers should have authorizations and licenses, and accused the company of engaging in unfair competition.

Arguing its case, San Francisco-based Uber said it should be regulated as an information services provider,...

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