French court decides not to ban Uber service

Uber has struggled with legal and reputational travails this week but it received a much-needed lift on Friday after French authorities gave the taxi hire service breathing space to set up its UberPop service.

A Paris judge ruled UberPop -- a service which allows drivers without a taxi license to register with Uber and offer trips in their own cars at a cheaper rate -- could be offered in France while the company challenged certain aspects of French transport law in a higher court, news media reported.

However, the court ruled that some of taxi hire service's advertising should be temporarily banned.

Earlier, France's economy minister weighed into the controversy, saying Uber is a "reality" in Paris but people have to be protected.

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"It doesn't make sense to have a crazy driver without a license because one day you'll have an issue," Emmanuel Macron said at a conference on Thursday.

The French case follows a slew of legal challenges around the world for the San Francisco-based start-up. Earlier this week, Uber was banned in Delhi after one of its drivers was arrested on suspicion of rape, and suspensions in the Netherlands and Spain have added further pressure.

Uber
Andrew Harrer | Bloomberg | Getty Images

But one venture capitalist said despite the bad news, Uber will continue to draw cash from investors.

"I do not think it's going to put off investors," Eileen Burbidge, partner at venture capitalist firm Passion Capital, told CNBC in a TV interview.

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"That people really believe in the potential of what Uber and its platform can do for all types of services whether its' going to be ride sharing cars or otherwise."

Baidu investment?

Uber has so far raised $1.2 billion in investments and is valued at $40 billion and investors are still flocking to the company.

On Friday, media reports suggested Chinese internet giant Baidu is eying an investment of up to $600 million in Uber. A Baidu spokesperson told CNBC the company had arranged a press conference for December 17 when it was to announce a "strategic deal with an American start-up company of some prominence", but declined to provide a name of the firm.

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Investments in taxi apps have exceeded $2 billion since 2011, according to IHS, and analysts don't expect regulatory issues to get in the way of further expansion.

"The big picture globally is that lots money is going into this company even in countries with regulatory issues," Jack Kent, senior mobile analyst at HIS, told CNBC by phone.

Driving towards IPO?

Not only has Uber run into problems with the law, its top level management has been under fire. Emil Michael, Uber's senior vice-president of business outlined plans last month to hire four researchers and four journalists to look into the personal lives of other journalists critical of the company.

The company has since hired law firm Hogan Lovells to audit its handling of customer data.

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Burbidge suggested part of the regulatory issues and misbehaviour could be down the fact that Uber does not need to go public due to its already strong backing.

"But what is interesting is being already valued at $40 billion one could argue they don't need to go public and they don't necessarily need the scrutiny of regulators and the public markets, "Burbidge said.

"Because it's been able to raise this money and stay private it seems to have gotten ahead of itself in terms of being able to keep up with regulatory conditions and actually policy."