Uber, a taxi-hailing app operator, has suspended its popular ride-sharing service in Korea, succumbing to mounting concerns by Seoul authorities and angry taxi drivers.
The San Francisco-based start-up last week announced it was suspending its UberX budget service that allowed passengers to hail the company’s registered drivers through its smartphone application.
Its premium Uber Black, a limousine service for foreign nationals, senior citizens and handicapped people, will continue operating in accordance with local laws, the company added.
“We stay committed to cooperate to reach a compromise with the city and taxi industry, and look forward to working together to bring regulated options to Seoul,” Uber said Friday in a statement.
The Uber mobile application
Uber, which is now valued at about $40 billion, has faced a series of legal problems around the world amid growing accusations that the company does not meet national transportation rules.
In Korea, the company started its service in August 2013. Despite positive reviews from its drivers and passengers, it has been at odds with the Seoul government, which led to the indictment of its CEO Travis Kalanick last year.
The city put pressure on Uber by offering a cash reward of up to 10 million won ($900) for those who reported drivers providing illegal transportation. The company, however, fought back by paying the drivers’ fines.
In a move to ease concerns, David Plauffe, the company’s senior vice president of policy and strategy, visited Seoul to propose a new driver registration system in February.
“Our purpose is not competing with taxi drivers. We want to simply offer affordable and reliable alternatives,” he said at the time. “This is not a zero-sum game.”
The visit by a close ally of President Barack Obama unexpectedly fueled anger among taxi drivers, who criticized the Uber executive for attempting to solve the issue politically instead of through talks with them.
“Uber is causing confusion in the nation’s transportation industry,” said Kook Cheol-heel, head of an association of taxi drivers based in Seoul. “There will be no more talks with them.”
Amid regulatory headaches around the globe, Uber has recently shifted its strategy to sustain its rapid expansion. As part of the plans, the company also decided to offer a limited service in Korea.
On Sunday, the company said it had completed the process of registering with the Korea Communications Commission to use location data in accordance with the local laws that allow its Uber Black service to be operated legally.
The public reaction was mixed about the service suspension. Many passengers have complained about being overcharged or turned down by taxi drivers who are selective about their destinations.
“Uber is cheaper and more convenient,” said a 30-year-old office worker who was a frequent user of the service. “It is more an issue of consumer choice than regulations.”
Another female user expressed concerns about the lax background check for the drivers: “Even licensed taxi drivers sometimes turn out to be criminals. I think the company should come up with solutions.”
By Lee Ji-yoon (jylee@heraldcorp.com)