Uber awaits the results of the pending case in the European Court of Justice (ECJ)—a case that could have a significant impact on its ability to operate in Europe in accordance with its “we’re just a platform” business model. The Uber case will likely influence other cases, from Airbnb to Electrolux’s reflections on an Uber-like washing machine service to driverless car fleets.

This case raises one key issue that undergirds “platform” business models generally: the need for a blended regulatory approach that regulates both the digital and the continuing physical reality. Uber uses real cars with human drivers and passengers however digital the systems connecting them all may be. Electrolux contemplates real washing machines washing real, damageable clothing even if the project reflects a broader obsession with smart homes.

Positioning the ECJ’s decisions as “either a traditional taxi company or just a platform” misses the point entirely—and the risks and opportunities that regulators should prioritise.

  • Regulators should not permit technology to be used an excuse for lower levels of safety than would otherwise be required of comparable “classic” services. They should regulate what is happening: cars on the road and human safety and well-being at stake. The digital organisation does not change in the least the safety risk to individuals or society. (And from a commercial standpoint, Uber should understand that many of us would be more positive about taking Uber if we felt that training and safety requirements were at least the level of London black cabs, NY yellow cabs, and equivalents on other countries—if not superior.)
  • Regulators should ignore categories. It doesn’t matter whether you call drivers “employees” or “independent contractors.” It matters that there is a flexible—again blended—approach to treating Uber drivers fairly based on their commitment to the company.
  • Regulators should encourage creative approaches to society’s challenges, from products and services to business models. Uber offers positive ethical benefits starting with access to cars when taxis might otherwise be unavailable. Uber creates employment or employment supplements for drivers with widely varying personal and professional situations. Uber brings potential environmental benefits of diminishing the overall number of cars needed.
  • Regulators should encourage a race to the top not a digitally-averse campaign to maintain the lowest common status quo in products, services, and corporate behaviour. Classic taxi drivers have less to fear if the safety, quality, and availability of their service surpasses that of Uber. Uber has a long way to go before their drivers can guarantee the flexible cars, the encyclopaedic knowledge of the streets, and the safety record of, say, London black cabs.

Bottom line: regulators should move on from a black and white, categories-based approach—all right or all wrong with clear labels—to blended category-free regulation for the new blended economy. They should regulate for a combined digital and physical reality, and they should regulate to mitigate the risks of any negative fallout on these new regulatory schemes on all stakeholders.

(See Mark Scott’s excellent article in The International New York Times for more detail [link]).


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