In a matter that is relevant for all online platforms, aggregators and similar service providers, the ECJ today (20 December 2017) provided important guidance as to the scope of the term ‘information society services’, as used in the Ecommerce Directive (Directive 2000/31/EC).
The ECJ decided that Uber renders a transport service rather than an information society service. It found that the intermediation service such as rendered by Uber must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’.
That means that Member States are free to regulate the conditions under which such services are to be provided.
Following today’s judgment, platform operators should verify whether they can (still) be considered to be a provider of information society services. If not, they may be subject to further regulation and compliance obligations.
In 2014, a professional taxi drivers’ association in Barcelona, Spain, brought an action before the Barcelona court seeking a declaration that the activities of Uber Systems Spain, a company related to Uber Technologies (together: “Uber”), amounted to misleading practices and acts of unfair competition. Neither Uber Systems Spain, nor the non-professional drivers of the vehicles concerned, had the licences and authorisations required under the local laws in Barcelona to provide taxi services.
The debate centred on the legal qualification of the services offered, and the subsequently applicable regulations.
Uber argued that the local laws for providing taxi services in Barcelona were in violation of European law, because European Member States can only regulate certain cross-border services in Europe in limited ways (see in general the Services Directive (Directive 2006/123/ EC)). The professional taxi drivers’ association in Spain, however, claimed that Uber offered transport services. These do not fall under the Services Directive and are subject to national regulation.
Uber argued that it did not offer transport services but rather ‘information society services’, as referred to in the Directive on ecommerce. European Member States are limited in their regulatory possibilities concerning information society services.
Therefore, the main question was whether Uber’s services qualify as transport or information society services. This question was referred to the European Court of Justice (“ECJ”).
The European Court of Justice ruled today that Uber’s services qualify as transport services and that European Member States are not, therefore, limited by the Ecommerce Directive or Services Directive in their regulation of these services.
The ECJ based its ruling on the following. The ECJ first found that intermediation services, consisting of connecting, by means of a smartphone application, a non-professional driver using his or her own vehicle with a person who wishes to make an urban journey, are, in principle, separate from transport services. Transport services consist of the physical act of moving people or goods from one place to another by means of a vehicle.
ECJ found that Uber’s services are not limited to the intermediation service set out above. According to the ECJ, Uber simultaneously offers intermediation and urban transport services, the latter of which it renders accessible, in particular, through software tools and whose general operation it organises for the benefit of persons who wish to accept that offer in order to make an urban journey.
The ECJ furthermore found that Uber’s intermediation service relies on a selection of non-professional drivers using their own vehicles; without Uber’s intermediation service those drivers would not be led to provide transportation services; without Uber’s intermediation service persons wishing to travel in urban areas would not be able to use the services of such drivers; Uber has a decisive influence on the conditions for the service provided by such drivers, which is evidenced by the fact that Uber establishes at least the maximum price of the trip, Uber collects this price from the customer before returning a portion to the driver; and Uber exercises some control over the quality of vehicles and their drivers and the behaviour of the latter, which may lead, if necessary, to their exclusion.
According to the ECJ, Uber’s services must, therefore, be regarded as forming an integral part of an overall service whose main component is a transport service and, accordingly, must be classified not as ‘an information society service’ but as ‘a service in the field of transport’. The ECJ specifically ruled as follows:
“an intermediation service such as that [provided by Uber], the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law.”
Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the Services Directive and Ecommerce Directive. It follows that, as EU law currently stands, it is for the Member States to regulate the conditions under which such services are to be provided in conformity with the general rules of the Treaty on the Functioning of the EU.
Implications for other online service providers
In its ruling, the ECJ makes it clear that information society services that form an integral part of an overall service whose main component consists of a service that is not an information society service, will not be qualified as information society services. Other online service providers (such as online platforms) will need to determine whether their services form an integral part of an overall service with a different service not being an information society service an as the main component. If that is the case, their service might not be classified as an information society service. Further regulation and compliance obligations might then apply.
Opinion of the Advocate General
As a side note, the ECJ has not completely followed the Opinion of the Advocate-General (“A-G”) in the same case. The A-G made a distinction between analogue and digital services. According to the A-G, only part of Uber’s service was offered electronically. Users of the Uber service reserved taxis electronically (via the Uber application). However, according to the A-G, the transport element was not offered electronically. In this type of mixed services, the A-G stated that a service would qualify as an information society service if the analogue service would be economically independent from the digital service. The ECJ did not specifically mention economic (in)dependence as an element for qualifying services as information society services. The ECJ takes a slightly different approach as outline above.
This article was co-written with Raoul Grifoni Waterman.