Top European court rules Uber is a taxi service, in major challenge to the gig economy

(Image credit: Carl Court/Getty Images)

last updated 20 December 2017

On Wednesday, the European Union's highest court, the European Court of Justice, ruled that ride-hailing giant Uber is a transportation company not an online service matching drivers with passengers, and that it must comply with the same rules governing taxi associations. The ruling means Uber may have to give benefits to employees and pay licensing fees, treating drivers more like taxi drivers than independent contractors.

Uber "must be regarded as being inherently linked to a transport service," the high court decided, and the 28 EU member countries will have to regulate "the conditions under which such services are to be provided." Uber said it already complies with the transportation laws of most European countries it serves, though this is widely seen as a setback to Uber's expansion and is the first such ruling to affect Uber across an entire region.

A taxi group in Barcelona had filed the challenge to Uber, and the European Court of Justice's ruling could serve as a template for other regulations of the gig economy, where people work as freelancers and contractors rather than full-time employees with employee protections and benefits. As much as 30 percent of working-age people in Europe and the U.S. work in the gig economy, according to research by McKinsey Global Institute.