New blow for Uber: Top EU court likens it to taxi service

BARCELONA, Spain (AP) — Uber suffered a new blow today as the European Union's top court ruled it should be regulated as a transport company instead of a technology service, a decision that crimps its activities around Europe and could weigh on other app-based companies too.

Taxi drivers honked horns to celebrate the ruling, which punctures Uber's image as the pioneer of a new gig economy that's setting its own rules while governments clamber to keep up.

Uber – which is wrapping up a particularly punishing year – sought to downplay the decision, which might only affect the company's operations in four countries. Uber said it will try to keep expanding in Europe anyway.

The decision by the Luxembourg-based European Court of Justice in theory applies to ride-hailing services around the 28-nation EU. But the ruling leaves it to national governments to decide how and whether to change the way they regulate Uber and similar services.

Uber has gained a strong foothold and customer base in most European countries, adapting its multiple services to bend to local rules when faced with legal challenges. Its hallmark low-cost service – hooking up unlicensed freelance drivers with riders via an app – is already banned in many European cities, and instead Uber's services are much like taxis, just more flexible and sometimes cheaper.

Some other internet-based businesses fear the ruling could suppress innovation and usher in other restrictions, as European authorities look for ways to regulate companies that operate online and outside traditional sectors and don't fit in with current laws.

The decision stems from a complaint by a Barcelona taxi drivers association, which wanted to prevent Uber from setting up in the Spanish city. The taxi drivers said Uber drivers should have authorizations and licenses, and accused the company of engaging in unfair competition.