Spain’s Professional Federation of Taxi Drivers is gunning for one of Spain’s burgeoning new startups, demanding a “precautionary” suspension of Cabify, a transport app that recently received a multimillion dollar boost in funding.
But Cabify are fighting back, arguing before a Madrid judge on Wednesday that despite its name, it is not a cab company.
“Cabify is actually classed as a travel agency because we are not taxi drivers but a provider of a transport service,” the startup said in a statement sent to The Local.
The startup, which secured funding worth $12 million (€10.5 million) from Japanese e-commerce giant Rakuten in October, is now facing a legal battle against Spanish taxi drivers.
It is a headache for Cabify, which is at pains to point out the differences between it and rival app Uber, which was banned from operating in Spain in December 2014.
Unlike Uber, Cabify only operates in cities where it can obtain a regular taxi license.
“Cabify has always operated within Spain’s legal framework,” a company spokesman told The Local.
Speaking to The Local in October, when news of the taxi drivers association’s legal action broke, a Cabify spokesman, keen to distance the Spanish startup from rivals like Uber, said:
“Those kinds of companies that have been labelled part of the 'sharing economy' have nothing to do with Cabify”.
One taxi driver complaint in the legal dispute is that drivers operating with the VTC license must return to their base or taxi-rank after each pick up, but Cabify drivers do not do this.
Cabify’s defence said that its 400 drivers are self-employed, but have signed a contract with the company that stipulates they will work only for Cabify during their work hours, differentiating the company from rivals Uber and BlaBlaCar, which work with private drivers and are merely an intermediary between driver and client.
Another difference between Cabify and its banned rivals is that the startup bills users directly, charging a fixed price for journeys, no matter what the traffic conditions.
It provides a service that is, on average, 15 percent cheaper than regular taxis, Cabify claims.
Uber was banned in Spain in December 2014 after fierce opposition from taxi drivers, while French startup BlaBlaCar is currently facing legal action in Spain.