It's Crunch Time For Uber in Australia

Australian regulatory authorities have moved to crack down on insurgent ride-share company Uber following a decision in a Melbourne magistrate's court that could see Uber drivers face trial.

Days after a Magistrate Julian Ayres ruled that Uber X driver Nathan Brenner could stand trial for operating a ride-share service without the appropriate licenses, the New South Wales Roads and Maritime Services have issued 40 Uber drivers with suspension notices in a crackdown on the company's drivers.

This is the latest in a series of setbacks around the world with France declaring Uber illegal in its jurisdiction and a California Labour Commission decision defining Uber drivers as employees.

Within Australia, the service is illegal across most state jurisdictions, as Uber drivers do not fall into the existing regulatory framework that covers taxi and hire car drivers. This means Australian Uber car drivers are effectively operating a black market in what is a direct challenge to authorities.

With a trial date set for October 9, a conviction result will make regulatory authorities around the country more comfortable in setting up sting operations for Uber drivers similar to those that initially targeted Brenner and ten others.

Not that Uber cares what they think. The company's policy so far has been to confront regulators head on. The company has been paying all fines issued to drivers and refuses to ask for permission before it sets up shop in a new city . That would mean having to pay for a taxi licence, which can go up to $40,000 each.

It is an aggressive strategy that's uncommon in Australia except, interestingly, in the mining sector. Since the 1970s mining companies have sought to change government regulations around labour by tactfully adapting the law. As Dr Sarah Kaine, who is a researcher in employment relations at the University of Technology in Sydney explained, "what the mining sector tried to do was change the regulatory system across the country in order to fit the very constrained environment in which they are operating. Uber has been doing that now, though much more overtly."

In Uber's bloody cage-match with authorities, Kaine gives two possible outcomes: either the fightback from regulators and weight of legal proceedings will scare investors away, leaving Uber to fold, or the company will prove resilient with its continued expansion into big markets such as India while negotiating compromises in other jurisdictions.

"Uber is probably being even more clever than we know," Kaine said. "Many people think you try and get in and work the system from the inside, but the research shows that's not very effective. So Uber's strategy of attacking it head on may be more effective."

Dr Eric Windholz is a lecturer and Associate with the Monash Centre for Commercial Law at Monash University. He also tips Uber will be ultimately successful despite its setbacks as the regulatory framework in which it operates will be forced to adapt, as it has throughout history.

"To me, this is not a new issue," Windholz said. "This is an issue that has played out over and over again in many industries. What is different this time is the incredible speed with which it has moved and the speed at which it has achieved commercial success. I could be quite philosophical and go back to the middle ages where the invention of the printing press put the monks out of business."

Chief among these examples are those of the UK government's " Red Flag Laws" passed in 1865 that required "self-propelled" vehicles to be driven by three-man crews, one of whom would walk 60 yards ahead of the car waving a red-flag. The maximum speed limit was set at four miles an hour.

The difference this time around is that no one expected smart-phone technology to move so quickly to dominate the market.

"If we approach this in a punitive mindset, we're not going to solve the problem. We need to approach this creatively," Windholz said. "The horse has bolted. Uber is here. Uber has succeeded. You can't close the barn door now, you can't reverse back to where we were."

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