Uber told to stop ride-sharing business test in Fukuoka

Kyodo, Bloomberg

The government has told U.S. company Uber Technologies Inc. to suspend a pilot project for its ride-sharing transportation business in the Fukuoka area, officials said.

The Land, Infrastructure, Transport and Tourism Ministry believes that the smartphone application service — ordinary drivers using their own cars to carry people who need a ride — likely violates the Road Transportation Law prohibiting unlicensed taxi services.

The order is a fresh blow to Uber, whose ride-sharing functions are also under scrutiny in cities from Paris to Seoul.

Until now Uber has avoided regulatory obstacles in Japan by working with taxi operators and car-hire companies in Tokyo.

The Fukuoka pilot program marked Uber’s first expansion in Japan outside Tokyo as the company faces growing competition from smartphone apps introduced by local taxi companies.

Uber started the pilot project with an affiliate of Kyushu University on Feb. 5 in the city of Fukuoka and nearby areas with the aim of collecting data on traffic demand.

Under the project, a person asks for a car through Uber’s smartphone application and a registered driver will transport the person to the destination free of charge.

Uber pays registered drivers according to the time driven, with some earning tens of thousands of yen per week. It is not clear how long the pilot project will continue.

Uber’s Japan unit indicated its intention to continue the project, saying it will try to dispel any concerns by talking with the ministry and paying the drivers for expenses such as data communications charges.

The convenience of Uber’s services has led to a global expansion, but the company founded in 2009 has also faced opposition from taxi companies and questions over passenger safety.

The ministry officials also said they are concerned about potential problems with compensation payments following accidents.

Uber’s presence in Tokyo is still small, partly due to increasing competition from local taxi operators and the city’s availability of 50,000 taxis — almost four times the number in New York.

Among Uber’s local rivals are apps introduced by Nihon Kotsu Co., the nation’s largest taxi company, as well as the Tokyo Hire-Taxi Association.

In January, Nihon Kotsu tied up with Line Corp. to start a taxi hailing service on Line’s popular chat app. About 3,340 Nihon Kotsu taxis in the Tokyo area will be equipped to pick up customers using Line Taxi. The service will expand to include almost 23,000 taxis owned by Nihon Kotsu’s network nationwide.

Tokyo Hire-Taxi Association’s app, called Takkun, which started operations later than Uber, now has the largest fleet in the city. It’s working with eight member taxi companies, with the total fleet reaching 11,000 vehicles and covering 55 percent of the taxis in the city, it said on its website. An English version targets rising inbound tourists, competing with Uber for English-speaking users.

  • wanderingpippin

    Did I miss something? Or is something missing from the article? In the Fukuoka project the passenger is taken to the destination free of charge and Uber pays the driver. But where does Uber get the money with which to pay the driver? Is this a charity project?

    • 151E

      It’s not clear from the article who is paying, but normally Uber acts as a middleman for transactions between riders and drivers. Also, Uber doesn’t charge a fixed rate, but uses a dynamic pricing system that fluctuates with supply and demand.