Daimler’s Taxi-Hailing App Hits a Speedbump in Germany

While Uber has struggled to gain a foothold in Germany, Daimler’s taxi-hailing app mytaxi has flourished. Now a legal dispute over discounted fares is threatening mytaxi’s business model.

A German court ruled on Tuesday that heavily discounted fares offered to customers who paid electronically via the mytaxi app were illegal. Mytaxi, which is owned by Daimler, was offering cab rides for a 50% discount in several German cities. The case was brought by German taxi operator group Taxi Deutschland, which offers a competing app.

“We are disappointed by the ruling of the court. We firmly believe that the 50% marketing campaign of mytaxi has been lawful. We are currently evaluating our legal options,” a Daimler spokesman said in an emailed statement Tuesday.

Mytaxi, which was launched in June 2009, is a taxi booking app that connects passengers with a licensed taxi driver. Mytaxi operates in 40 European cities, including in Germany, Austria, Italy, Poland, Spain, and Switzerland. The app has more than 10 million registered users, the company says. Mytaxi doesn’t charge its drivers a fixed monthly fee. The app is free for users. Taxi drivers in Austria, Germany, Italy, and Portugal pay a 7% provision fee for each ride booked via the app. In Spain and Poland, drivers are charged 0.99 € ($1.08) per tour.

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While Daimler (DDAIY) is best known as the company behind Mercedes-Benz, it’s also focused on creating other revenue sources around transportation over the past several years. Daimler subsidiary moovel houses all of the company’s mobility services, including car-sharing company car-2go, and two apps: Ridescout and moovel. The moovel app combines all local public transport, car-sharing providers car2go and Flinkster, mytaxi, rental bicycles, and Germany’s national rail service. Ridescout does the same thing for people living in North America. Daimler acquired both mytaxi and Ridescout in 2014.

Mytaxi has dominated the market in Europe, particularly Germany, because it works within the legal framework—this latest issue of discounted fares aside. It’s against German law for individuals to commercially drive people around without a proper license.

The company’s fleet of drivers are all are licensed, not private, drivers. Uberpop, Uber’s low-cost service in Europe which uses unlicensed drivers, can’t operate in Germany. Uber can only offer UberX and UberBlack in the country.

For more on automakers getting into the ride-hailing business:

Mytaxi has faced the courts before—twice in Germany and once in Vienna, Austria—over its 50% discounted fare. Each time, the court ruled in mytaxi’s favor. Daimler was surprised by today’s ruling by a Frankfurt, Germany court that deemed the practice illegal. Mytaxi spokesman Stefan Keuchel noted that this is “only another step in a long a journey,” adding that the company will likely appeal and take it to a higher court.

Mytaxi has “ambitious” plans to expand its service into new cities and countries in 2016, according to a company spokesman who didn’t provide further detail.