TALLINN — Uber has run into a host of political and regulatory troubles in many European cities.
Then there’s the Estonian capital.
A new law took effect this week that enshrines the ride-sharing company’s ability to operate in Estonia on the books. It’s one of the first times this has happened anywhere in Europe — and from the point of view of Uber’s otherwise difficult experiences in the Old World, it offers lessons and some encouragement for how to work the politics to save its business.
There’s a catch, of course. Estonia’s rather exceptional when it comes to openness to disruptive companies. And even in this northern Baltic country, Uber’s arrival in Tallinn prompted protests by taxi drivers. It took Estonian regulators and members of parliament close to two years to mediate between concerned parties to agree on a law that everyone — ride-sharing firms, taxi drivers and consumers — could live with. The rules essentially put private-hire drivers and taxis on similar legal footing. A common licensing and quality vetting process will be put in place, among other systems. Insurance for ride-booking services is an unresolved question.
Uber’s investment in navigating Estonia’s politics eventually paid off.
But the scalability of the Estonian experience is somewhat beside the point for Uber now. “It’s momentum,” said Enn Metsar, the company’s general manager in Estonia. “Regulators are working together on a lot of these issues … these solutions have caught on.”
Few bright spots
Uber could use some good news in Europe.
London’s transport regulator revoked its license in September, pending an appeal, over safety concerns. Taxi drivers have taken to the streets in Spain and France, forcing Uber to roll back flexible services that allowed virtually anyone with a license to drive with the app. The firm voluntarily pulled out of a number of existing markets, including in Denmark, Bulgaria and Hungary, largely because of potentially restrictive new rules.
And things could get worse when a landmark European Court of Justice ruling on how Uber should be treated in Europe comes down, likely before the end of the year. If the court rules Uber should be regulated as a transport service rather than an online intermediary, as many expect, nothing will stop European regulators from continuing their crackdowns on its services.
Taxi drivers have taken to the streets in Spain and France, forcing Uber to roll back flexible services | Miguel Tona/EPA
The Baltic region is a bright spot. In late September, Latvia’s parliament approved a new law regulating ride-sharing services, which will come into effect in March. Finland will have a similar law in effect by July. Lithuania, where Uber already operates, crafted new rules clarifying Uber’s legal status.
The one obvious takeaway from Estonia is that Uber’s investment in navigating the country’s politics paid off, eventually.
When the company launched here in 2015, its lobbyists put on a charm offensive, meeting with parliamentarians and ministry officials across the country. “We were very open about discussing with everyone,” Metsar said. “We involved all of the [interested] parties.”
Their lobbying forced onto the agenda the issue of how to regulate new ride-sharing services. Estonian regulators and politicians friendly to Uber saw a chance for the country to set a digital example.
“The state must enable. Old technology should be in a museum, not be protected on a state level,” said Estonian Reform Party MP Kalle Palling, who played a major role in drafting and negotiating the rules that took effect this week.
The Estonian parliament initially proposed a law that would largely affect internet platforms like Uber and Taxify, an Estonian ride-sharing app that connects with local taxi companies as well as private vehicles.
In response, some 1,500 drivers hit the streets in protest. Estonia had just changed its public transportation act in 2014, tightening oversight of taxi drivers. While some ministries were reluctant to again change rules for taxis, taxi drivers felt they were doubly disadvantaged as their competitors got a boost and they faced new restrictions.
Regulators went back to the drawing board. “That process was the icebreaker … for the ministries. [We realized] the technology changes so fast that you must be ready to change the law even every year if it’s necessary,” Palling said.
By putting taxis and private-hire vehicles on a similar footing, the new law significantly lessens the previous regulatory burden on taxis while still regulating private vehicles. Everyone will have to apply for a license, vehicle card and service card. App-based services won’t have to use a meter or specific signage.
Markus Villig is the founder and CEO of the ride-sharing platform Taxify | Martin Bureau/AFP via Getty Images
The new law is fair, said Villem Tori, the director of Estonia’s main taxi union, the Union of Estonian Automobile Enterprises.
From Tallinn to London
Estonian rules will be a lot harder to apply in London — not just for Uber.
Taxify, the Estonian startup, asked for an operating license in the U.K. capital in the spring, but heard nothing for months, said Martin Villig, Taxify’s co-founder.
So Taxify decided to buy a company that already had a license and launch in London in September. Its license was revoked only three days later. “Our problem was that there was no transparency in the process,” Villig said.
Transport for London, the local regulator, declined to comment.
Harry Cooper contributed reporting.