Uber is heading towards a storm. That´s one of the ways to describe Uber´s current situation. It has been completely prohibited in some countries. It is still working in Slovakia, although taxi drivers are not the biggest fans. Lots of articles have been written about why Uber is cool and why taxi drivers are not entirely right. The truth, of course, is somewhere in the middle. What is more troubling is that the whole of the EU has the ability to take precautionary steps against Uber. They cannot ban Uber completely though. However, Uber´s actions will be judged differently due to embedded legislation. The underlying reason is simple. Uber´s entire business model is based on so-called information society services, or e-services.
And this is where it gets to another level. Taxi drivers may be right to argue the case of unfair competition on Uber´s part, as the company´s drivers are differently regulated for performing the same activity. The problem is the delineation of an exact definition of e-services. Uber claims it only provides a mobile app that can be used to book rides – an operation that clearly falls under the banner of e-services, according to Uber´s representatives. Yet, the Advocate general did not agree while stating that Uber also carries out transportation services in the course of its operational activities. To be more precise, Uber´s app is also closely tied with the conclusion of a business transaction, whereby the driver takes the passenger from point A to point B. Uber uses its own algorithm to calculate the definite price of a ride. The conclusive opinion of the Advocate general does not have to mean anything because it is only a proposal for a decision to be made by the Court of Justice. Still, Uber´s defense is losing ground.
Despite these developments, it is advisable to take the whole situation positively. On the one hand, nothing bad would happen if Slovakia deregulated its market of taxi services, thereby increasing competitiveness. Taxi drivers themselves have previously admitted that general requirements were high and often irrational.
On the other hand, even if this could significantly damage Uber, we have already seen the alternative. A similar service has established itself in the USA, and this one cannot face legislative challenges so easily. The name of the fame is Arcade city. It is basically Blablacar in the context of urban distances. The company started up in Texas, was founded by former Uber drivers and has already expanded its app to 155 countries. Its main advantage lies in the fact that it does not operate as a third party overseeing the process of booking or pricing. They simply provide the app and everything else takes place between the driver and the passenger. The company acquires 10% of every ride´s fee. This represents the only fee payable to the company. This app is already available in Slovakia as well, but customers are yet to become aware of its existence.
We will see how this Uber situation unfolds. However, it´s rather typical for the market that if there is a struggling company, another one will step in and take its place. That´s the way it should be. The aim of the market and competition is to reduce costs to all parties and to ensure consistency between supply and demand. The best way to do it is without unnecessary obstacles and regulations, which only increase costs and the final price of goods and services to be paid for by customers.