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[Newsmaker] Tada takes center stage in carpooling service dispute

Concerns rise over ‘mutual destruction’ between taxi industry and ride-hailing services

On March 7, South Korean ride-sharing company Kakao Mobility struck a deal with taxi unions that was expected to bring an end to protests by cab drivers. Two cab drivers had killed themselves by self-immolation to protest Kakao’s services, which they said would destroy their livelihoods.

Although taxi unions accepted the agreement, which limits car-sharing services to four hours of operation daily on weekdays, some cab drivers remained unsettled, as other car-sharing services continued operating as normal.

Chief among them is Tada, operated by car-sharing company SoCar. In what appeared to be a protest against Tada’s carpooling service, a 76-year-old taxi driver killed himself by self-immolation Wednesday. His taxi was found to bear the handwritten slogan “Tada Out.”

“It was only after the government granted immunity to the illegal car-sharing service,” a taxi driver union said in a statement following the death. “Now, Tada is increasing its number of cars dramatically and choking our necks. We have nowhere else to stand back.” 

Cab drivers on Friday held a massive rally in central Seoul to denounce Tada car-pooling service for destroying taxi industry. Yonhap
Cab drivers on Friday held a massive rally in central Seoul to denounce Tada car-pooling service for destroying taxi industry. Yonhap

Since its launch last year, Tada’s service has gained popularity among riders in recent months by operating within a legal loophole that allows rental cars with more than 11 seats to offer ride-hailing services outside the four-hour window that smaller vehicles must respect.

Tada has differentiated itself from traditional taxi industry touting customer-friendly service -- a response to complaints of poor service among cab drivers. Tada drivers are banned from refusing rides or engaging in unnecessary small talk. 

Passengers ride in silence or listen to soft background music, and electronic device chargers are provided along with humidifiers and scent diffusers to make the ride more pleasant. Tada said it served 600,000 customers last month.

Faced with growing challenges from alternative mobility companies, taxi drivers have accused Tada of engaging in illegal business practices and filed a complaint with prosecutors. They cited a different clause in the law that regulates the taxi industry, prohibiting rental car services from receiving separate payments for driving services.

Lee Jae-woong, CEO of Tada and SoCar, has been vocal in defending his company from the accusations. Criticizing the taxi industry for politicizing the death of the cab driver protesting his company, Lee said it was hyperbolic to say that his company caused the taxi industry to lose out on revenue. 

“There are people who forecast deaths and encourage it. There are people who incite violence and use it politically. … It’s so devastating. I don’t understand how our society came to this,” Lee said in his Facebook account on Friday.

“I am hoping that Seoul taxi unions that oppose Tada will come up with specific data about how much they lose in terms of revenue. If there turned out to be a loss, they have to tell us whether it is due to a fare hike, a recession or Tada.”

While Lee, former founder of Daum Communications, has not disclosed his company’s financial records, he said the company’s revenue adds up to less than 2 percent of what taxi companies in Seoul bring in. For all taxi companies nationwide combined, it’s more like 1 percent.

The hostility arose in tandem with concerns that escalating conflicts between the taxi industry and ride-hailing app services could end in “mutual destruction” and undermine the country’s fledging mobility businesses.

The Korean Startup Forum, an association of startups, said Monday that the two industries will continue to clash if the government does not meet them halfway. The group said the government needs to enforce the agreement it mediated between Kakao and taxi industry in March.

“If our efforts to revolutionize the mobility industry are overwhelmed by truth distortions and radical politicizing, the taxi industry and mobility startups will end up destroying each other,” the forum said in a statement.

“Under the unfounded criticism that taxi business would be pushed out by mobility startups, the government has continued to stay silent. It’s like it is rejecting (the March agreement) itself.”