What's going on?

Uber lost a major UK Supreme Court�ruling on Friday, which isn�t the sort of service the ride-hailing giant�s grown accustomed to.

What does this mean?

Uber famously treats its drivers as freelancers, but this court ruling � which has been in the works for the last five years � means there�s no wiggle room any more: it�ll have to treat the 25 who brought the case as employees. See, Uber already dictates its drivers� contract terms, remuneration, and ability to work, so the court figured it was only right they were given a regular salary, not to mention vacation time and sick pay.

Uber will now face a tribunal to decide how much it’ll have to pay those drivers. And given there are around 1,000 others with identical complaints, it�s likely that the floodgates holding back similar settlements will open � though, for now, the company doesn�t have to reclassify all its British drivers.

Why should I care?

For markets: The costs might outweigh future opportunities.

Uber�s food delivery platform has benefited from the pandemic, sure, but its ride-hailing business has suffered. Investors, for their part, might�ve hoped its earnings would get a boost when economies reopened and cautious customers opted for private Ubers over public transport. But between these newly elevated costs in the UK � Europe�s largest ride-hailing market � and looming problems in California, profit could be a long way away � which might be why Uber�s stock dropped on Friday.

The bigger picture: This ruling is an issue for the entire gig economy.

The Uber case could also come back to bite other businesses reliant on gig economy workers. Take Deliveroo: the global food delivery service � whose biggest market is the UK � relies on freelancers to deliver its takeout, and it might face extra costs that could derail the profit it�s promised investors. Talk about bad timing: it�s reportedly planning an initial public offering before the end of March.