Uber in Italy: A lot of Opposition, but Ultimately It will Take all the Market

The Milan skyline: the old meets the new

The plight of Uber in various EU countries (see Spain here and Germany here) can be regarded as emblematic. The battle generally fought between the incumbent taxi industry and the US platform highlights the influence of the taxi lobby with powers-that-be. It illustrates how conservative or protectionist the authorities of the country are, and how popular the service truly is with users and gig economy workers. It shows how sensitive the market is to well-designed digital offers, and whether or not the alternatives to those services are appealing to users. And it says a lot about the strength of the local startup ecosystem: if Uber can find a few allies, then it could mean there are other innovators whose interests are also to fight the powerful influence of established corporations.

In Germany, Uber is just not that popular, because being a Uber driver in Germany is mostly not worth it and Germans use a host of local apps and services. The alternatives to Uber are decent enough for a lot of users. Furthermore, depending on the city and the Land, there is a different legal situation: Uber is banned in some places and tolerated in others. Even if the EU were to make all Uber services legal everywhere in the EU, Uber would still have a relatively hard time gaining traction in Germany as fast as in Spain, France or Italy.

In France, the battle between the taxi lobby and Uber is fierce, but unlike in Italy, it also pits local digital startups —Le Cab, Chauffeur-Privé, Snapcar, Heetch— in league with Uber to fight the influence of the taxi lobby and liberalise the market. The repressive measures implemented by the French government to stop Uber’s progression are hurting a host of local ride-sharing platforms. Uber is strong enough to survive the legal attacks whereas smaller competitors could suffer badly. In the end, Uber could become the only alternative to the traditional taxi rides. Meanwhile it has found unexpected allies in the local startup ecosystem.

In Italy, Uber is a very popular service that would just conquer the market completely if it was unconstrained by legal barriers. The taxi industry does not offer unified seamless digital alternatives to its services. There are few if any local startups that compete with Uber. Italian taxis are highly regulated and there’s a strict limit on the availability of taxi licences. The market seems like a chaotic jungle of legal (and illegal) taxi drivers fighting to grab customers off the street.

In Rome, for example, tourists can find the taxi situation somewhat confusing: they are generally pleased to see that the 45-minute (or more) ride from the Fiumicino airport to the city (and back) costs a fixed amount (€40) if the taxi is licensed in Rome, but appalled to discover that the ride can be twice as expensive when the taxi is licensed elsewhere (like Fiumicino). Though adventure-seeking tourists are happy to find authentic Italian-ness in Roman taxi drivers, Uber’s expansion in Italy happened fast because Italian users find the service very appealing. The company now operates in five of Italy’s biggest cities — Milan, Turin, Padua, Genoa and Rome.

Uber’s dominance would have been complete if a Milan court had not ruled in May 2015 that allowing users of Uber’s smartphone app to order a ride from a driver creates “unfair competition”. The court ruled that Uber was to be held to the same standard as a public taxi service, so UberPop, Uber’s ride-sharing platform that connects unprofessional drivers to passengers, was deemed illegal because its drivers don’t have a commercial licence. (The exact same ban occurred in France just two months after, in July 2015). Meanwhile, UberBlack, which has drivers with professional licences (vetted by the company) continues to be available in Milan and Rome. Before the ruling, Uber had in fact been operating with fewer restrictions than almost anywhere else in Europe. It had already seduced drivers and passengers alike. Carlo Alberto Maffè, a business professor at the Bocconi School of Management said that “this is the first case that I know of where a single judge — one person — can decide to stop a service at a national level on the basis of an (unsubstantiated) economic and theoretical argument.” Until the ruling, Uber was able to operate in a grey zone (neither legal nor illegal) and expand freely.

Benedetta Arese Lucini has since then thrown in the towel. Uber no more.

Anti-Uber movement peaked in the streets of Milan when the then general manager of Uber Italy, Benedetta Arese Lucini, was the victim of a violent harassment campaign that exposed Italy’s still ingrained sexism. In February 2015, a sign accusing Arese Lucini of being a prostitute was displayed near her house. Lucini said the sign was evidence of a cultural bias against female entrepreneurs in Italy. Corriere della Sera journalist Beppe Severgnini commented on the attacks in which he too saw blatant sexism:

“Se Benedetta fosse stata un manager americano, un Ben o uno Stan con i baffi hipster, i toni sarebbero stati diversi.” (“If Benedetta had been an American manager, a Ben or a Stan with a mustache hipster, the tone would have been different.”)

The attacks were particularly violent: she had eggs thrown at her and many Uber vehicles were attacked and damaged in Milan. The address of her office in Milan had to be kept more or less secret and unmarked from the outside: “we try to avoid too many people knowing where we are”, she said then. Uber’s marketing directors were insulted on Twitter every day and everyone involved with Uber was afraid of Italian taxi drivers’ “private justice”.

This is not a picture of Milan… but it must have looked something like it…

Uber’s challenges exemplify the challenges that any innovative player faces in Italy: deeply entrenched regional or local interests, like the taxi industry, a slow-moving judicial system and a tiresome bureaucracy. As in other countries where Uber faced the same legal issues, Uber argued in Italy that it is fundamentally a tech company and not a traditional taxi service. It has been pounding this argument so often and so relentlessly that the argument may ultimately win.

The case is likely to be settled for all of the EU this year when the European court decides whether or not Uber is in fact to be dealt with like a traditional taxi service. The decision will set a precedent for all legal battles across the continent. Needless to say, Uber will wield all its lobbying power to make that happen. But whatever the EU decides this year, all the anti-Uber legislation passed in Italy (and France) will only have hurt local entrepreneurs and stifled local innovative efforts more than it will have hurt Uber, whose resources (legal and financial) are nearly limitless. Uber has become so popular with all users desperate for a well-designed and convenient service that these users have started exerting pressure on the authorities. In Italy, Uber is confident there is no credible alternative to its services. It can wait. It knows it will have it all.

Laetitia Vitaud @Vitolae

This piece is an extract from a longer article about the gig economy in Italy -> to be published soon!