Europe says Uber is a transportation company — and that's a crushing blow

UPDATE: Dec. 20, 2017, 1:46 p.m. EST Updated to include a tweet from Uber CEO Dara Khosrowshahi

Uber's terrible, horrible, no good, very bad year just got worse.

On Wednesday, the Court of Justice of the European Union, the highest court in the EU, ruled that the ride-share company should be considered a transportation service and not, as Uber had hoped, a digital company.

Though the court's ruling does not explicitly deal with labor issues, it opens the door to Uber having to regard drivers as employees. This would mean the company could be forced to offer its drivers minimum wage, holiday pay, and other benefits. Uber's model relies on treating drivers as contractors, allowing the company to take a cut of their pay but not offer much in return.

That could be a major blow to Uber, which is still burning through cash and has yet to turn a profit. Now, it could face a challenge operating its service across Europe.

This Tweet is currently unavailable. It might be loading or has been removed.

Uber CEO Dara Khosrowshahi disagreed with assertions that the ruling hurt Uber, adding that existing EU regulations had already stopped the company from employing non-professional drivers in most of its operations.

This Tweet is currently unavailable. It might be loading or has been removed.

This particular ruling stems from a case brought by a "professional taxi drivers’ association" in Barcelona that claimed Uber represented unfair competition, since drivers for the company weren't subject to the same "licenses and authorisations" in Barcelona that taxi drivers were.

Uber had argued they were an "information society service" since they connected riders with drivers.

But, in their ruling, the court said:

In today’s judgment, the Court declares that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law. Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce.

Uber is now subject to those same regulations across the 28-country EU, and the ruling is likely to have an effect on similar app-based companies trading in the gig economy.

Uber had already been operating as a transportation service in some markets, including Madrid and Berlin.

Uber said in a statement that the ruling will not be a major changes to its business: "This ruling will not change things in most EU countries where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours."

But there's no denying the ruling creates many new hurdles for Uber as it tries to expand in a region of the globe where it's already facing uphill battles, like the current fight going on in London for a variety of reasons related to Transport for London's concerns over safety.