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Classifying Uber’s Business Model Is a Complicated Affair

'Brexit' brouhaha briskly broached by World Economic Forum'Brexit' brouhaha briskly broached by World Economic Forum
Travis Kalanick, center, CEO of Uber, reacts at a sub-forum during the World Economic Forum 2016 Summer Davos in Tianjin, China, 26 June 2016.Robert Schlesinger—Picture-Alliance/DPA/AP

I’ve always found that the If-it-walks-like-a-duck Theory is as good as any for evaluating businesses. Retailers tend to look like each other, no matter what they’re retailing. The same usually is true for software companies and semiconductor makers and so on. The corollary also works. Companies that slapped a “dot-com” on their names in the Internet bubble era weren’t digital wonders just because they said so.

I got to thinking about my theory this week when the European Court of Justice heard a case about just what to call the ride-sharing company Uber. European taxi companies and their political patrons would like Uber to be considered a transportation company, just like them. Naturally, they’d like to see Uber regulated accordingly. For its part, Uber prefers to be thought of as a digital platform, a totally different beast that ought not to be subject to the rules that govern old-fashioned cabs.

As with so many things these days, it’s not as simple as it looks. At first blush, Uber obviously is a transportation company. I use it to get a ride to the airport just as I used to call for taxis. It seems just as obvious that Uber drivers are employees of a sort, seeing as they must follow Uber’s rules. So if you follow this logic, Uber is a duck, plain and simple.

But as I said, it’s not simple. Uber doesn’t own cars. Its drivers can work whenever they like; they are subject to nobody’s schedule. So maybe, as Uber argues, it’s not a duck at all. Still, it is most definitely a bird of some sort. Governments have every right to regulate a digital platform that arranges rides and provides work for its citizens. And regulate they will.

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The EU court doesn’t plan to rule on this case until the spring. Incidentally, that’s about when the book I’m writing about Uber will be published. If anything about this company or the industry it helped create were straightforward, I’d probably be done by now.

Have an uncomplicated day.