Uber will suspend its services in Hungary this month, the ride-sharing service company announced on July 13. The company will quit the market on July 24, as new legislation that allows authorities to block sites offering illegal taxi services enters into force in the country.

Taxi drivers spent the early months of 2016 paralysing Budapest on a regular basis, a tactic that brought the Hungarian government down firmly on their side. While Uber appeared to be seeking to open up more routes for compromise, fears of growing protests - taxi driver strikes in 1990 were famously the only ones to ever force a Hungarian government to back down - prompted the ruling Fidesz party to push through a bill last month aimed at forcing Uber from the road.

The legislation orders that the country's transport authority "make temporarily inaccessible" applications and websites that promote illegal taxis. It also contains measures to boost options to directly punish unlicensed taxi drivers. 

Uber has been operating in Hungary since 2014 November, and currently claims to have 1,200 drivers and about 150,000 users in the country. The company says it operates in 480 cities globally, and that the Hungarian law blocking its operations is “unique in the world". Budapest will become "the only big city in the region that will not be offering the services of Uber,” it asserts.

While Uber said it will suspend its activities in the country as of July 24 for “an indefinite period,” it added that it does not exclude a return to Hungary in case regulation is changed.

“Uber drivers can lose their licences or the licence plates of their cars, despite the fact that they have all the necessary licences and pay the required taxes,” said Zoltan Fekete, operations manager at Uber in Hungary. The company does not want to expose drivers to these risks, he insisted.

Two-way street

Uber claims that it has made considerable improvements in its service in Hungary in order to operate lawfully. Drivers now have tax numbers, provide an electronic invoice after each ride, and most have obtained their licence for passenger transportation, it insists. The company also outlined alternative proposals on regulations and tax in a letter sent to the National Development Ministry.

The government, however, has not been open to negotiations, Fekete said at a press conference, according to Index.hu. The Uber representative earlier told bneIntellinews that Uber sticks to its opinion that banning new technologies, only because they cannot fit the framework of old regulations, is not a solution to dealing with the rise of the sharing economy.

Yet according to other claims, Uber's enthusiasm to negotiate with Budapest is in stark contrast to its initial approach. A lobbyist hired by the ride-sharing service as it entered Hungary told bne IntelliNews earlier this year that on arrival the company dismissed efforts by Hungarian officials to offer compromise. "They insisted that compromise is not in their business model," he claims.

Janos Fonagy, state secretary at the ministry of national development, claimed last month that Uber was "consciously and cynically breaking every Hungarian law". The ministry is not against innovation, he stressed, but will step up against illegal services.

Uber, meanwhile, clearly hopes to find support in Brussels, which has regularly pushed Budapest back in its efforts viewed as discrimatory against foreign investors. The company claims the government’s actions oppose the policies of the European Commission. The commission made clear in early June that it does not approve of bans for the ride-sharing service.

Issuing guidance entitled "A European agenda for the collaborative economy" the EU executive said it aims "to support consumers, businesses and public authorities to engage confidently" in the sharing economy.