[David Ignatius] Benefits of national service

Uber, a threat or wakeup call to local cab industry?

Cab unions, Seoul seek to eliminate ride-sharing despite growing demand

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Published : 2014-07-22 21:10
Updated : 2014-07-22 22:00

Controversy over Uber’s car-booking services is spreading like wildfire here following Seoul City’s decision to team up with related government bodies including the Korea Communications Commission to keep the U.S. firm out of the local transportation market.

The city government has said it would try to stop Uber’s operations in Seoul, claiming that the services are illegal.

“Seoul City will push for stricter measures, including fines for more Uber drivers, in order to ban the illegal ride-sharing service,” said an official from the city government’s taxi and logistics division, declining to be named. 

He added that it plans to cooperate with the Korea Communications Commission ― a government authority overseeing mobile and Internet services ― to completely shut out the application. The KCC declined to comment. 
Uber CEO Travis Kalanick. (Bloomberg)

Uber is a globally used app that allows users to hail both cabs and private vehicles for rides. In the Seoul app, however, the service was found to involve mostly privately operated luxury cars.

With more people opting for Uber despite high-end cabs and call taxis operated by Seoul City, local cab drivers’ associations have been lashing out, stepping up the pressure on the city to act.

“Illegal Uber services are wreaking havoc on the transportation industry,” said Kim Sung-je, a director from Korean Taxi Workers’ Union, one of the largest organizations representing taxi drivers in Korea. He also criticized the U.S. headquarters of the firm, saying it should be “punished.”

The union and Seoul City see Uber as illegal because it has not received approval to use privately owned vehicles for commercial transportation.

Industry watchers say while the sentiment is understandable, Seoul City seems to be overreacting.
A user scans for an available vehicle using the Uber application in London. (Bloomberg)

“It is one thing to accept the complaints and another to side with them completely without acceptable grounds,” said one observer close to the matter, declining to be identified.

He added that Uber is serving as a wakeup call for local cabs to shape up, as they have long been denounced for poor service that includes ripping off foreign tourists.

On Monday night, Uber issued a statement saying the city government was “out of touch” with the smart city movement.

“While other global leaders, including London, Washington, D.C., Singapore and Shanghai have embraced forward-thinking technologies and their role in improving consumer services, comments like these show Seoul is in danger of remaining trapped in the past and getting left behind by the global sharing economy movement,” the statement said.

The U.S.-based start-up also said its partner drivers comply with safety regulations and professional requirements, and that all of its vehicles are properly and fully insured.

In Europe, taxi drivers have lodged similar complaints against Uber, saying it is pulling prices down and stepping up competition.

The San Francisco-based start-up currently operates in more than 150 cities around the world, including Beijing, Singapore and Hong Kong. In June, the company raised $1.2 billion at a $17 billion valuation, and Google Ventures believes Uber’s market value would eventually surpass $200 billion.

By Kim Young-won (wone0102@heraldcorp.com)

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