Uber CEO Travis Kalanick. REUTERS/Kim Kyung-Hoon LONDON — Uber was dealt a major blow in Europe on Thursday, after Advocate General Szpunar, a key advisor to the European Court of Justice, said the Californian ride-hailing firm is a transportation firm and, therefore, subject to local laws governing this type of company.

The decision is non-binding, but highly important.

The European Court of Justice is currently deciding whether Uber is a transportation firm or a digital service, something that will have significant implications for how it operates on the continent.

Uber, which does not own its own vehicles and whose drivers are technically self-employed, frames itself as a tech firm simply connecting independent drivers to passengers. But a binding ruling from the ECJ that it is a transportation business would subject it to stricter rules and regulations in some cases.

The ECJ's judges do not always follow the opinion of advocate generals — but they tend to.

"Taking account of the fact that the supply of transport constitutes, from an economic perspective, the main component, whilst the service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component, the Advocate General proposes that the Court’s answer should be that the service offered by the Uber platform must be classified as a ‘service in the field of transport’," the ruling says.

"It follows from that interpretation that Uber’s activity is not governed by the principle of the freedom to provide services in the context of ‘information society services’ and that it is thus subject to the conditions under which non-resident carriers may operate transport services within the Member States."

In short: Uber is a transport company, and needs to follow local laws on how other taxi and transportation firms operate — which are often far stricter than those it currently follows.

A protest against Uber by black cab drivers in London. REUTERS/Luke MacGregor In a statement, an Uber spokesperson said: "We have seen today's statement and await the final ruling later this year. Being considered a transportation company would not change the way we are regulated in most EU countries as that is already the situation today. It will, however, undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button."

The ECJ's binding decision is expected later this year.

As Uber has expanded aggressively around the world, it has faced numerous lawsuits — both in Europe and elsewhere — over how it operates.

Meanwhile, Uber is reeling from numerous scandals. A lawsuit from Waymo, Google's self-driving car unit, accuses the firm of stealing its tech. A former employee accused it of a culture of sexism, prompting an ongoing internal investigation. CEO Travis Kalanick was caught on video aggressively berating a driver after they complained about changes to pay. Numerous top executives have left the company.

Read the full ruling here »