Uber Technologies Inc., whose taxi-hailing app faces regulatory challenges globally, has shut down a ride-sharing trial in Fukuoka after the central government called it illegal.
Uber on Friday halted operation of Everyone’s Uber, a program that let users in the city of Fukuoka share rides, Evelyn Tay, a Singapore-based spokeswoman for the company, said in a statement Saturday.
Uber will consult the transport ministry on ways to structure the program to meet official requirements, she said.
The move is a fresh blow to San Francisco-based Uber, whose ride-sharing functions are under scrutiny in cities from Paris to Seoul.
Until now, the company avoided regulatory obstacles in Japan by working with taxi and hire-car operators in Tokyo. The Fukuoka program marked its first expansion outside the capital, where local taxi firms are pressuring Uber with their own apps.
Customers of the pilot program received free rides, while Uber paid drivers a fee for participating as it collected traffic and usage data. The service was deemed illegal because it let drivers without taxi licenses profit by providing transport, ministry official Hidetaka Sakai said earlier.
Uber has said it will revise the compensation model and continue to negotiate with authorities.
The purpose of the program, started jointly on Feb. 5 with the Kyushu Technology Licensing Organization, was to collect data to understand local transportation needs, Masami Takahashi, CEO of Uber’s Japan unit, said in an interview last month.
Uber was able to “collect meaningful data for analysis that will shed light on transportation patterns in various areas (including underserved parts) of the city,” the company said Saturday. “In the next phase, we will focus on better understanding specific transportation needs from the data collected.”
Uber’s presence in Tokyo is still small, partly due to increasing competition from apps introduced by local taxi operators and the city’s availability of 50,000 taxis, almost four times the number in New York.