About the European digitalisation, collaborative consumption and data economy

Digitalisation – the way to go

The European Commission is well aware of the great opportunity the digitalisation creates for Europe. The 2020 strategy in 2010 determined an ambitious plan for the EU digital single market, including some generous financial investments. Commission’s Communication from May 2015 builds on the strategy from 2010 outlining a couple of concrete legislative proposals and actions for the following two years. The highlighted areas are e-commerce, copyrights, telecommunication and, last but not least, online intermediaries and sharing economy. This post builds on my previous article on sharing economy and  discusses some current regulatory/judicial responses to sharing economy (for the time being, Uber related only). The last part touches upon the proposed policies and rules in the area of data economy (cloud computing, data protection, big data etc.). It might not be that obvious, but I believe this is exactly the point at which sharing economy will either win or die.  

Uber and the hassle of  regulating sharing economy

Let me start with Uber, an Internet application that brings together two groups of users - those looking for a taxi transfer, and those who offer the transport. It appeared in 2009 in San Francisco and in a short time it spread to 58 countries around the world. Upon its arrival in Europe Uber experienced strong resentment, even aggression from the traditional taxi drivers, while the consumers mostly favored its services. Taxi drivers and their associations have argued Uber is an unfair competitor who does not respect the same rules, although it competes on the same market. Namely, taxi drivers have to comply with numerous regulations to ensure safety of passengers. In addition, they need to get a licence and go through a specific education/training. Uber ignores all these regulations. As a result, the US company now faces some serious court trials and their services have been banned in Belgium, Italy, Spain, Germany and the Netherlands.

The legal answer to whether Uber should be regulated in the same way as taxis is far from being crystal clear. First of all, it is difficult to find the right legal definition for Uber (which is necessary to determine  the applicable rules) - is Uber an information society service or a taxi service? Perhaps only an internet platform or intermediary? A Spanish Court of Appeal has recently requested a preliminary ruling from the European Court of Justice on clarification of Uber’s legal nature. In particular the court is seeking the answer to the question as to whether the European directive on services in the internal market also applies to Uber, since in this case the legal restrictions have to be interpreted in the light of the principle of proportionality, the principle of freedom of establishment and the principle of non-discrimination. The interpretation by the CJEU would be a useful guideline for national judges and regulators in the countries where Uber services have been found (or have been allegedly) illegal.

Technology as the foundation of the new economic models

Business models growing from the idea of sharing among the consumers are not something particularly new. Consumers have been collaborating for ages. What is new is the technology that has boosted their economic potential. However, at the same time, the technology has also created risks and decreased consumer confidence. For example, Uber has open access to information about the locations of all its users (i.e. real-time data of more than 8 million persons) and uses complex statistical analysis to analyse their movements. Not only can the outcomes of those analyses be used (and abused?) for price discrimination, deep concerns should also be raised due to the enormous amount of sensitive personal data collected and processed by Uber.

The European Commission has addressed some of those questions in the third section and the fourth section of its latest Communication. It is clear that the economies of sharing can (on a long term) only succeed in a safe and consumer-friendly environment, which respects the principles of privacy and consumer protection law. Also, it is evident that a certain level of standardisation and clarity over data reuse are indispensable for the development of the EU data economy. With the upcoming Regulation on the protection of personal data and the proposed revision of E-privacy directive the EU is taking a balanced approach in moving toward the innovative, sustainable and prosperous society. Hopefully first results will be seen soon. 

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