South Korea's ride-hailing service Tada was cleared of a transport law violation in court last week - a rare victory in a market that's been particularly ungenerous to ride-hailing companies.
Since starting up in late 2018, Tada has won 1.7 million users as it capitalized on growing demand and the funding muscle of its Japanese backer SoftBank Group.
Ride-hailing services: entrepreneurship and innovation or unlicensed call taxi service?
The topic of our News In-Depth tonight with Suh Yong-gu, Professor at Sookmyung Women's University. Professor Suh, welcome to the program.
For those of our viewers not too familiar with this particular case, why don't you go over the case of this ride-hailing service, Tada, for us.
The two executives have been indicted, but prosecutors had sought one-year jail terms arguing this mobile app service that allows you to hail chauffer-driven 11-seaters was a de facto unlicensed taxi service, right?
So, the primary sticking point was whether this Tada service could be viewed as a new service based on innovative technology or simply illegal taxi operation. It looks like Seoul Central District Court, in this case, saw it as former.
As apparent in this case, Tada's ride hasn't been all smooth as it has come up against increasingly tough regulations in a market that has been particularly unkind to ride-hailing apps and a taxi lobby that is an outsized political force.
This case itself was brought about by a lawsuit by the nation's taxi industry, right?
Ruling that Tada followed current law, Seoul Central District Court judge Park Sang-koo said, "After going through lots of labor pains, ride-sharing services are being accepted all over the world. South Korea's taxi and the mobility industry must together with regulatory authorities come up with a constructive solution."
What is the judge trying to say from this ruling?
Even with this ruling, the ride-hailing firm still faces the threat of increasing regulations that's spooked investors as well as violent protest from this powerful taxi lobby ahead of a general election in April.
The ruling has been met with sharply divided reactions from the nation's start-up industry and taxi drivers.
"We strongly support the court's decision clearing Tada's ride-hailing service of transport law violation. The ruling appears to reflect industry concerns that if such a service is ruled illegal then, startups in emerging industries are impossible under the current regulatory system."
" We, taxi drivers, get everything tested, controlled, and we only get to raise fares once in a few decades. Meanwhile, Tada fix their own price, declare whenever they like without any kind of control."
It certainly doesn't look like Tada will be off the hook here, does it?
Leaving the court after the verdict, the CEO of VCNC, the operator of Tada had the following to say. Listen in.
"I deeply appreciate the court's wise decision that will open up a new path for the future our society. We will try our best to come up with ways to coexist and cooperate with our drivers as well as the taxi industry to create a better mobility ecosystem."
South Korea, as we all know, is a global IT powerhouse with the world's highest smartphone penetration. Yet, Uber's ride-hailing business was curtailed in 2015, two years after its launch, with legislation banning the use of ride-hailing services by private cars.
That, of course, following fierce protests from the taxi lobby. Uber now offers limited services.
What kind of a solution could this country come up with? What does the future of mobility look like for South Korea and for the rest of the world?
Professor Suh, many thanks for your insights this evening. We appreciate it.