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Sharing economy flagship Uber brought to trial in Seoul

Posted December. 27, 2014 02:04,   


Korean prosecutors brought the U.S.-based taxi service Uber to trial on Wednesday. Uber is a service to link up customers and drivers through a mobile phone application. Founded in San Francisco, the U.S., in 2009, the taxi service has gained explosive popularity from customers and spread to 200 cities in 50 nations over the past five years. The prosecution of Korea indicted Travis Cordell Kalanick, the founder and CEO of Uber Technologies Inc., the heads of Uber Korea Technologies Inc. and MK Korea Co., a domestic rental-car service company, without detention.

Globally, Uber is at the center of heated debate on whether it is illegal or innovative economy. It is hard for passengers to know Uber drivers’ backgrounds or identities. Since Uber cars are not registered for passenger transport service, passengers may have difficulties in receiving coverage from insurance company. Instead of complying with the taxi fare system under orders by the Ministry of Land, Infrastructure and Transport, drivers of the app-based taxi company apply surge-pricing during peak hours and take 20% of the price as commission discretionally. Recently, New Delhi City of India banned Uber service as an Uber driver sexually assaulted a 20-something female passenger. Some cities in the Netherlands, Germany and the U.S. instituted a ban on Uber or filed a lawsuit.

Around the globe, Uber has been emerging as a representative business of sharing economy. Sharing economy is a system where many people share or rent a product peer to peer. This collaborative economy has gained attention as an alternative and solution to sluggish economy and environmental pollution. Uber and Airbnb, a website to rent out lodging, have become sharing economy flagship. Considering such global trends, now is the time to review how to make innovative services co-exist with existing service providers, rather than nipping the bud.

Since the Seoul City ‘government decided to provide 1 million won (approx. 910.5 U.S dollars) for those who report Uber’s operation while defining the app-based call taxi service as an ‘illegal pseudo-taxi service’ and the prosecutors brought the founder of the riding-sharing company to trial, it is concerned that Korea may be portrayed as a nation unfriendly to technology innovation or free market competition. Other countries have taken administrative measures on Uber, but none have executed criminal punishment against the riding-sharing company.

Seoul City and the local taxi industry must consider why consumers prefer Uber service. Customers’ complaints are growing over local taxi’s unpleasant service, frequent refusal to ride passengers and crime committed in the cab from time to time. The taxi industry must not be satisfied with the vested interest, and start development of innovative services for customer convenience such as a mobile phone application or pricing diversifications.