Uber’s Achilles Heel: The Rule of Law
It’s been quite a week for Uber. The company is facing a slew of legal challenges around the world. While each case may appear to be unique to its particular situation, the accumulation of legal slings and arrows represents a much larger issue. Globally, Uber and other gig companies have been aggressively promoting a business model that is quite possibly incompatible with rule of law. If Uber wins in these cases we will need to confront the question: can a 21st century global economy survive and thrive without rule of law? Or do we need to rein in the platform sector, even if it means we need to jettison its dominant business model?
What happened this week: in the United Kingdom, drivers launched a precedent-setting new lawsuit to demand access to their data. The UK Supreme Court also heard arguments in the final stage of a long pending case on driver employment classification. And that’s not all. In Australia, gig companies lost in a class action suit brought by taxi drivers. And all of this follows on a critical decision by Canada’s Supreme Court on June 26 which ruled that drivers cannot be bound by forced arbitration agreements.
What does it all add up to and why is it critical to gig companies’ business model? All these legal battles have three fundamental implications. First, Uber and other gig companies cannot succeed if they have to operate by the same rules as other firms. Second, since their business model cannot succeed within the boundaries of law, the companies must use a defensive strategy that seeks to overturn the law rather than contest the facts. Third, to succeed in escaping legal accountability these companies must fragment disputes — and this is why both the Canada and UK cases represent a pivotal moment that may define our future global economy. Let’s explore each of these points.
Evading Regulation is the Business Strategy
Uber and other transport sector gig companies have spent millions of US dollars in legal fees contesting the proposition that they should be bound by the same rules as other private hire transportation. This argument is at the heart of the Australia class action case. Taxi drivers are alleging that Uber undercut their business by disregarding local regulation and thereby cutting costs. The statement of claim presented stark, irrefutable…