App economy dodges bullet as Uber wins in court
It’s a rare ray of sunshine for the under-fire Uber, as it won a key battle as the US Second Court of Appeals ruled its Terms and Conditions (T&C) were legally binding, reports Telecoms.com (Banking Technology‘s sister publication).
Uber has proved to be a difficult ally to have in recent months with the firm facing constant heat in the press, but many internet companies (and fintech firms) will be secretly thanking the unlikely hero after the ruling. In short, Uber managed to convince the judges the T&Cs were legally binding after a former-customer found enough complaint to force the tech giant into the court room.
While this might seem a relatively minor bit of news in the wider picture, the small pebble cast into the sea of digital transformation had the potential for some pretty torrid ripples. Many in Silicon Valley would have been on the edge of their seats waiting for the ruling, which had it gone the other direction, would have potentially opened up numerous companies and apps to public scrutiny and lawsuits from disgruntled customers.
One area of dispute in the Terms and Conditions was that any legal dispute would have to be handled privately instead of in the public eye. The individual finding issues, Spencer Meyer, claimed he missed this detail when reading the T&Cs, but also accused the company’s business model of being anti-competitive, allowing third-party drivers to fix prices.
“While it may be the case that many users will not bother reading the additional terms, that is the choice the user makes,” says Appeal Judge Denny Chin.
The complaint was initially filed back in 2014, but this slow-moving bullet could have caused some major issues. Chin found that the T&Cs were relatively plain, all being on one page, in clear writing, and even though there was a link which directed users to another version, this was made clear by the company. In short, Uber cannot be held responsible because the users are too impatient to read the T&Cs.
Aside from destroying Uber’s business model, should the decision have gone the other direction, there would almost certainly be numerous opportunist individuals attempting to cash in on the complicated and murky T&Cs format. The app economy, as well as the wider business models in the real world which are stimulated by apps would have been shaken.
This is a point which was argued by the internet companies and the US Chamber of Commerce; a ruling against Uber would slow, stall or slay progress in the digital economy. The ability to enforce online contracts would be called into question removing any legitimacy the companies have.
Whether this puts the issue to bed remains to be seen, but there are opportunist anarchists all around the world. Those who consider multi-national businesses the big bad monster hiding in the closet might take a page out of this slow moving saga, and have a pop at Uber or another internet company in another country. All that is needed is one victory to turn that ripple into a tidal wave, but for the moment, the US pond is remaining calm.
“The Second Circuit’s powerful and common sense opinion will serve to protect online contracting and strengthen commerce nationwide,” says Uber’s lawyer, Theodore Boutrous.
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