Analysis. A Roman court ruling shut down Uber services across Italy, enforcing the principle of public regulation in the absence of a political or legal framework for Silicon Valley capitalism.

Once again, courts step in to reign in Uber capitalism

By next week, Uber Italy will have to disable the app Uber Black, which provides unregulated drivers in Milan and Rome. Roman judges ordered Uber to shut down its Lux, Suv, Van and other services as well, killing off the last survivors of a decision in a Milan court, upheld in Turin, that outlawed the weapon of mass destruction for drivers: Uber Pop, which allowed anyone with a vehicle to become a professional driver without a license. The new ban is valid throughout Italy.

The order is the latest episode of a battle to the death between the American digital multinational and associations of taxi drivers. The court in Rome sided with an urgent appeal from the associations, assisted by a large team of lawyers. In the coming weeks, a civil case will continue, but for the moment Uber will have to suspend its activities.

For Uber, the ruling deals a serious blow to one of the principles of liberal capitalism, regulating “the competition” for non-scheduled public transportation. The “app economy” giant led by Travis Kalanick, valued at greater than $50 billion, is likely to lose, at least in Italy, in its aspirations for “disruption,” the theory of innovation favored by the champions of the new capitalism.

Their “power” is being increasingly reigned in by judgments supporting what they call “unfair competition” from the traditional players: the taxi drivers who have bought expensive licenses and who corner the market.

Uber Italy said it was “shocked” by the court’s ruling and is filing an appeal. The court’s order goes against recognition and support in other parts of Europe, the company said. “Now the government can’t waste more time and needs to decide whether it wants to remain anchored to the past, protecting privileged profits, or whether it wants to allow Italian to benefit from new technologies.”

Beyond the typical Californian rhetoric about “new” and “old” technology, one must consider the grounds of the order. For the judges, “new” technology can be used in a manner respectful of government regulation, perhaps allowing users to track through the app “the car hire with the nearest driver” instead of letting them call “an individual driver.”

Uber drivers, however, are not subject “to rates predetermined by the competent administrative authorities.” This allows them to set lower prices according to market demand. The ability to undercut existing, regulated industries is the key to the success of capitalist platforms. The courts have sanctioned this typical post-Fordist specialization, and with their intervention they’ve helped make up for the lack of a political and legal framework for digital capitalism.

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