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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 277  May 4, 2020
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Alexa Busser ([log in to unmask])
*Regulating multinational digital platform enterprises: The case of Uber*
* <#m_-7528193622480775582__edn1>
Peter Muchlinski** <#m_-7528193622480775582__edn2>

Digital platform enterprises are an increasingly central part of the global
economy. The European Commission defines an online platform as “an
undertaking operating in two (or multi)-sided markets, which uses the
internet to enable interactions between two or more distinct but
interdependent groups of users so as to generate value for at least one of
the groups.”[1] <#m_-7528193622480775582__edn3> This covers a wide range of
enterprises. This *Perspective* confines itself to a single case-study, the
regulation of Uber taxi services, as an example of FDI issues involved.

Uber is a US-based company operating a worldwide network of taxi services
in many countries. It displays many characteristics of MNEs, including
integrated transnational management, a unified business format and a
network of overseas subsidiaries, used mainly to organize its tax affairs.
[2] <#m_-7528193622480775582__edn4> Its presence raises questions as to how
Uber should be regulated. Host countries can undoubtedly regulate digital
platforms where their operations create a nexus with the host country
through significant economic and social impacts. Uber has raised questions
concerning its treatment of drivers, who use its platform to secure
clients, the safety and consumer rights of those clients and Uber’s impact
on competition in the taxi-services industry. Uber’s operations also raise
issues relating to tax avoidance, but space prevents further discussion.

Uber has argued that it is only a technology platform, bringing together
self-employed drivers with clients, and not a taxi-services enterprise.
Under EU law, Uber taxi services are treated as transportation services
subject to member state regulation.[3] <#m_-7528193622480775582__edn5>
However, national courts are divided over whether the drivers are employees
entitled to labor protection or independent contractors. In addition, in
September 2017, Uber had its operator’s license removed by Transport for
London on the basis that it was not a “fit and proper” private car-hire
operator. This ban was provisionally lifted twice, but was reinstated,
subject to appeal, in November 2019.[4] <#m_-7528193622480775582__edn6> As
to competition, Uber is often accused of undercutting existing taxi-service
providers, including more highly regulated official municipal taxi services.
[5] <#m_-7528193622480775582__edn7> Here the issue is nuanced. Uber can be
said to offer greater consumer choice and pricing, but regulators must
decide whether this is legitimate competition or an abuse of competitive
power undermining market fairness.

The Uber case raises regulatory questions similar to those raised by
“brick-and-mortar” foreign investors. However, Uber should not hide behind
the “digital veil” and assume no managerial or legal responsibility for the
wellbeing of drivers, or the welfare of passengers, just because it offers
a cheap taxi service in the so-called “sharing economy.” In particular,
Uber’s precise business field must be legally recognized. It is surprising
that Uber London Limited was incorporated in 2012 as engaging in “other
information technology service activities” and remains so described,[6]
<#m_-7528193622480775582__edn8> whereas it should be registered as “taxi
operation” and “licensed carrier” similar to its competitors.[7]
<#m_-7528193622480775582__edn9> Accurate incorporation would clarify what
Uber does and avoid doubts that it should be regulated as a taxi operator
and not an information-technology services firm. The latter description may
offer an avenue for innovative flexibility in the development of Uber’s
business model, but this must not come at the price of fair competition and
responsible corporate behavior as expected from all taxi firms.

In addition, Uber is undoubtedly an “investor” entitled to protection under
international investment agreements (IIAs).[8]
<#m_-7528193622480775582__edn10> This raises further issues concerning the
legitimacy of host country regulation. The host country must ensure that
its regulatory controls over Uber are IIA compliant. At the minimum, a
non-discriminatory approach is required, a risk that arises out of Uber’s
potential to weaken existing market structures and create a backlash of
protectionist regulation. In addition, questions of fair and equitable
treatment can arise, should regulators unduly interfere with the operation
of Uber’s operations and, even, of expropriation if these measures
effectively stop Uber from doing business in the host country. Accordingly,
while regulators have a key public interest duty to ensure that Uber
conforms with the regulatory requirements that apply to all taxi operators,
these must be applied in an IIA compliant way.

* <#m_-7528193622480775582__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_-7528193622480775582__ednref2> Peter Muchlinski ([log in to unmask]) is
Emeritus Professor of international commercial law at the School of Law of
the School of Oriental and African Studies, University of London. The
author is grateful to Joshua Meltzer, Sophie Nappert and Harm Schepel for
their helpful peer reviews.
[1] <#m_-7528193622480775582__ednref3> See European Commission, “Public
consultation on the regulatory environment for platforms, online
intermediaries, data and cloud computing and the collaborative economy,”
Sept. 24, 2015, p. 5.
[2] <#m_-7528193622480775582__ednref4> Brian O’Keefe and Marty Jones “How
Uber plays the tax shell game”, **, Oct. 22, 2015.
[3] <#m_-7528193622480775582__ednref5> Case C-434/15* Asociación
Profesional Élite Taxi v Uber Systems Spain SL* ECLI:EU:C:2017:981
[4] <#m_-7528193622480775582__ednref6> “Uber loses licence to operate in
London,” *BBC News*, Nov. 25, 2019.
[5] <#m_-7528193622480775582__ednref7> Toby Moses, “Scrapping Uber’s
licence is unpopular but correct,” *The Guardian*, Sept. 23, 2017, p. 39.
[6] <#m_-7528193622480775582__ednref8> Uber London Limited UK Companies
House Registration
[7] <#m_-7528193622480775582__ednref9> See, e.g., Addison-Lee UK Companies
House Registration
[8] <#m_-7528193622480775582__ednref10> Enikő Horvath and Severin
Klinkmüller, “The concept of ‘investment’ in the digital economy: The case
of social media companies,” *Journal of World Investment and Trade*, vol.
20 (2019), pp. 590-609.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: Peter Muchlinski, ‘Regulating multinational
digital platform enterprises: The case of Uber,’ Columbia FDI Perspectives,
May 4, 2020. Reprinted with permission from the Columbia Center on
Sustainable Investment (**
<>**).” A copy should kindly be sent to the
Columbia Center on Sustainable Investment at **[log in to unmask]*
<[log in to unmask]>*.*

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Alexa Busser, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 276, Carolina Arriagada Peters, ‘Investment aftercare matters,’
   April 20, 2020
   - No. 275, Karl P. Sauvant, ‘Enabling the full participation of
   developing countries in negotiating an Investment Facilitation Framework
   for Development,’ April 6, 2020
   - No. 274, Marta Soprana, ‘Outward FDI and a global compact on
   home-country investment incentives,’ March 23, 2020

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *CCSI announces a call for papers for the Global Research Alliance for
   Sustainable Finance and Investment (GRASFI) 3rd Annual Conference*, *which
   will now be hosted online by CCSI on September 8-11, 2020*. The deadline
   for paper submission has been *extended to May 11, 2020*. Themes for
   papers include climate-related risks and finance, the role of the state
   (e.g., central banks, development banks, and regulators) in advancing
   sustainable finance, and social and human rights dimensions of sustainable
   finance, among others. A full list of themes, further information about the
   conference and submission details can be found on our website
   - *CCSI prepared a Scoping Study on Securing Adequate Legal Defense in
   Proceedings under International Investment Agreements (Scoping Study)
   the Ministry of Foreign Affairs of the Netherlands. A summary version (33
   pages) is available here
   A webinar (March 24, 2020) discussing the study and its findings is here
   accompanying slides with speaking notes here

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2020 Columbia Center on Sustainable Investment (CCSI), All
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*Karl P. Sauvant, PhD*

*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
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"Enabling the full participation of developing countries in negotiating a
WTO investment facilitation framework", "Concrete Measures for a Framework
on Investment Facilitation for Development", "Making FDI more Sustainable",
"Facilitating Sustainable FDI by...", "An International Framework to
Discipline Outward FDI Incentives?", "The Case for an Advisory Centre on
International Investment Law", "An Advisory Centre on International
Investment Law: Key Features",  "Incentivizing Sustainable FDI: The
Authorized Sustainable Investor", "The Potential Value-added of a
Multilateral Framework on Investment Facilitation for Development",
 "International Investment Facilitation: By Whom and for What?", "Towards
an Investment Facilitation Framework: Why? What? When?" are available at .

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