The European Commission has confirmed reports that it is set to launch a study next month on the digital ride-sharing service Uber.
EU transport spokesman Jakub Adamowicz told the Parliament Magazine that "the Commission will launch a study in September to analyse the markets for taxis and hire car with driver services in member states. This analysis will provide the necessary background for the Commission to decide on the need for - and possible character of - any further action at EU level."
The investigation comes as Uber poses an increasing challenge to taxi monopolies across the world. Since launching in San Francisco in 2009, it has expanded to 58 countries and over 300 cities worldwide.
However, its success has not been without controversy. It has met with intense, at times violent, opposition from taxi drivers, who claim it can only offer a cheaper device because it is not subject to the same safety and licensing regulation.
The problem pivots on the nature of Uber.
The company argues that it is a digital platform, connecting passengers with drivers. In its terms of service, it states it is not responsible for the quality of the transportation service provided or for the legality or ability of any of its drivers.
However, its competitors argue it is simply a traditional taxi service and should therefore be subject to the same laws as other taxi companies.
At present, the European Court of Justice (ECJ) is presiding over a case that will be important in determining whether Uber is a transport company or a digital service provider.
If the ECJ finds Uber to be a digital service provider, it will become difficult for national regulators to restrict its operations.
The distinction between the two is crucial. If the company were considered a digital service, under the 2006 services directive, the EU would have the power to regulate it across all member states. Transport, by contrast, is predominantly the jurisdiction of the 28 member countries, enabling them to rule on the legality of Uber.
Across Europe, the legal response to Uber has been mixed. France, Germany and Spain have made efforts to ban Uber's more frequently used and cheaper services, arguing it is unregulated and undercuts local competition.
Uber has challenged these bans, filing complaints with the commission against Spain and Germany and questioning France's pro-taxi 'Thévenoud law', which imposes a number of restrictions on licensed professional driver services like Uber.
Uber maintains that it is legal, benefiting the economy and the consumer. Mark MacGann, head of public policy for the company, has criticised the protectionist reflex of some member states when confronted with tech-based alternatives to incumbent services.
He warned, "Protectionism is denying Europeans growth and jobs…what's holding us back is this rear-guard protectionism in some member states."
The Commission has previously welcomed "the development of new and innovative services," with these services a part of the "sharing economy."
The sharing economy is a peer-to-peer approach aimed at improving consumer access and convenience. It is estimated to be worth €10bn in Europe alone and forecast to grow significantly over the next 10 years.
Earlier this year, Elżbieta Bieńkowska, European internal market, industry, entrepreneurship and SMEs Commissioner, highlighted the need to embrace sharing economy companies, saying, "This is a new way of doing business. We need to align with this, not fight it."
However, the Commission has urged that "new, innovative companies should not circumvent national rules," with the focus instead on creating "a level playing field between the different market players."
Whether they are able to do this is another matter. Policymakers find it difficult to reconcile promoting innovation with protecting incumbent competitors. A new, radical approach is urgently needed.