October 26, 2015

An Uber Lesson for Europe's Cold War Against Innovation

Michael D. Farren

Research Fellow
Summary

Late last month France's Constitutional Council upheld a ban on UberPop, the budget version of Uber's transportation service. The following day, a court in Brussels also ordered UberPop to shut down. Italy and Germany had previously banned UberPop, and Spain completely banned Uber's transport of passengers last year. Meanwhile, in the United Kingdom and across the United States, Uber, Lyft and other ride-hailing companies are being integrated – albeit gradually and grudgingly – into the existing transportation services market. What drives this difference?

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Late last month France's Constitutional Council upheld a ban on UberPop, the budget version of Uber's transportation service. The following day, a court in Brussels also ordered UberPop to shut down. Italy and Germany had previously banned UberPop, and Spain completely banned Uber's transport of passengers last year. Meanwhile, in the United Kingdom and across the United States, Uber, Lyft and other ride-hailing companies are being integrated – albeit gradually and grudgingly – into the existing transportation services market. What drives this difference?

The quick answer is that Europe suffers from a culture and policy environment which, at least compared to the United States, inhibits innovation and risk-taking. Continental Europe is home to only 18 of Forbes' list of the 100 "Most Innovative Companies," and none are in the top 20. In comparison, the United States has 47 companies on the list, including eight of the top 10. My colleague, Adam Thierer, identifies this stifling atmosphere as the "precautionary principle" – the idea that new innovations should be disallowed until they prove beyond the shadow of a doubt that they will not cause undue harm or upset the status quo.

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