In this week's war on Uber, Seoul government seeks ban

The world war against Uber has opened another front.

Today, the municipal government of Seoul, South Korea, said it will attempt to ban the ride-hailing app ostensibly because of a law that prohibits paid transportation with unregistered vehicles. Later this year, the Seoul government will unveil a similar app of its own.

“There’s no reason why more traditional cabs can’t use mobile apps to provide services that compete with Uber,” Gartner VP Nick Jones told VentureBeat.

“Uber is clearly meeting a need,” he added, “but in some towns that need exists because the old styles of cabs weren’t providing the quality of service people wanted.”

Seoul was the first Asian city that Uber took on, a year ago. It is a taxi-heavy market with four times as many cabs as New York City. But Seoul taxi drivers have a spotty reputation, reportedly refusing to take rides that aren’t long enough to be worth their time or not showing up as requested.

Uber, Jones told us, is “more than just competing on price [and is] also competing on quality of service and convenience.”

In fact, the Uber pricing system can sometimes work to drivers’ benefit, he said. It uses a sophisticated, “dynamic pricing to better match supply and demand,” meaning that a customer could pay more and drivers could get a higher fee at peak periods.

“This is something that traditional taxi models based on meters with a flat rate per-mile fee struggle to achieve.”

Launched in 2009, the San Francisco-based Uber app allows prospective passengers to find vehicles for hire from its registered taxi drivers via a smartphone without going through the standard taxi system. Uber removes from its roster drivers who have received lower ratings from its users and says it can more efficiently employ the time of participating cabs.

The current move for a ban by Seoul follows other anti-Uber actions there. In the spring, a fine of nearly $1,000 was levied by Seoul on a driver who got customers through Uber. The city government has also asked for a police investigation of the company, although that has been suspended because of a lack of evidence.

But Seoul is not alone in opposing Uber. Brussels and Berlin, for instance, have banned the service, and there have been anti-Uber demonstrations by taxi unions in New York City and Washington, DC, as well as cities in China and Europe.

“This temporary setback in Asia and Europe is not new to Uber as it faced similar situations before in the U.S. cities,” Parks Associates analyst Harry Wang told us. “These bans and disputes may be just temporary in nature and a bargaining chip to have Uber sit down in order to find a long-term solution.”

Jones agreed that municipal taxi regulation “can ensure that drivers are appropriate people, that passengers aren’t ripped off, that passengers are safe, and so on.” He pointed to “many cases where people using unlicensed cabs have been robbed or even murdered or girls raped.”

“Maybe the best model in the future,” he suggested, “is a blend of Uber — or similar systems — and regulation to provide both service and safety.”

But the whole dynamic changes, he said, when the next evolution of cars takes place by removing taxi drivers entirely from the equation. That’s a driverless future that Uber has already seen.