The Right To Challenge by the Uber Phenomenon

Lawmakers seem completely powerless against the innovative and bold models born from the digital revolution. On a case-by-case basis, to date the answers that try to classify these new activities have been more political than legal.

In the big game of disrupt-everything started by Uber, this morning the Constitutional Council for the fourth time is acting as referee. The justices will examine the important constitutional question posed by the VTC platform against the Thévenoud law that prohibited UberPop.* It’s up to them now to decide whether or not to shelve this system that allows some private individuals to pose as drivers. Thus, through media and by law, Uber has become a symbol, but of what? There are countless new words from “Uber-economy” to “uberization” and “to be ubered,” without anyone knowing very well what they mean, other than that they are new and potentially explosive. But the neologism “Uber-right” is one that no one uses yet, and it’s for a good reason: the ontological impossibility of the American company to immerse itself in codes, and then think! What about the old articles of the civil code of the old continental law?

Uber decided to raise its complaints on national television. Though it’s the loudest, Uber is not the only protester. All sectors are affected: transportation by BlaBlaCar, the hotel industry by Airbnb and Booking.com. There are countless “service” platforms which try to connect private individuals or professionals through the Internet or mobile apps. They all come to challenge not only the “old school” economy, but also the rights and the regulations that govern it.

Lawmakers remain powerless against these disruptive and bold models. No comprehensive and concrete answer has been provided. The related texts written at the mercy of the crises are likely to quickly overwhelm them. We just managed to handle the taxi crisis with the Thévenoud law, and the anger of the hotel industry with Article 33 of the Macron Law which enables the hotels to impose lower taxes than those they post on booking agencies’ websites… But for how long? The answers are, in this case, more political than legal. Meanwhile, questions remain unanswered. What of those companies? What’s the status of their independent contractors and service providers? How do you tax them? What guarantees and insurance exist for their services? And have these new economies also destroyed all the basic legal models?

“We must ask ourselves deep questions. The wage concept, for example, is complicated and newcomers are using it. Uber claims to be satisfied to ‘connect people’ and thus, thinks that it is allowed complete freedom. But in reality, Uber drivers are in a position that is similar to wage-earning,” notes Patrick Thiébart, a lawyer from the Jeantet law firm. In fact, conflicts are lying in wait. The law on the numerical economy that will be presented on Sept. 21 will not include anything on the status of people who take part in this new economy. In the United States, a class action suit is underway against Uber, following a lawsuit won by a former user of the platform who had her contract reclassified as an employment contract. To try to shed light on things, last July, the U.S. Department of Labor published guidelines for differentiating between an independent contractor and salaried worker by defining each.

Even regarding the tax issue, at which point does one enter an occupation that creates tax obligations and especially a VAT or income tax? “The involvement of fees in an activity that does not have a non-pecuniary title (as with car-sharing, for example), is not considered remuneration, and thus does not have to be declared. Likewise, a certain tolerance exists in regard to renting rooms. But today, there is still certain confusion around the evaluation of participation,” explains lawyer Thaima Samman. And confusion persists around the tech platforms. Thus Uber did not hesitate to present UberPop like a kind of car-sharing, between a sharing economy and an intermediation economy.** But when the former can be seen as barter, specifically defined by the civil code as an “exchange” (article 1706 and so on), the latter carries legal and tax consequences that are declarative and regulatory and much more important. And it is on this intermediation economy that rights stumble. “The current regulations do not make it possible to gauge the ability of these structures to be connected in a massive, fluid, permanent way anywhere near supply and demand, ” claims Thomas Picot, also from the Jeantet office. As a sign of the times, the office is preparing to launch a blog on the sharing economy to which a team of lawyers will contribute.

Should we write new laws, or use the ones we already have in order to solve the problem? This dilemma is the reason judges in the U.S., France, Spain, Germany and the European Union’s court of justice are baffled, and it’s up to them to figure out how existing laws, written for the old economy, will apply to these new phenomena like the sharing economy.

But perhaps it is time that legislators also become honestly interested in this. A study from PriceWaterhouseCoopers in 2014 evaluates the size of this economy at $335 billion (309 billion euros) in 2025, compared to 15 billion euros today. How is it possible that only the law of the jungle with the judge as hunter-regulator manages the system?

*Editor’s note: VTC are new car services in France (voitures de tourisme avec chauffeur) that let people reserve a car using a smartphone app that also handles payment.

**Editor’s note: Intermediation economy (economie d’intermediation) refers to the new sharing economy where technology connects people offering a service directly to customers who are seeking the service in question.