Uber Technologies suspended its ride-sharing service in Seoul on Friday, bowing to local authorities after more than a year of struggle over its ride-hailing services.
The decision comes only nine days after Uber made uberX free for riders there in response to a crackdown by city authorities, who offered a reward of up to 1 million won (US$910) to residents who reported drivers accepting payments for rides without a permit.
"This is the strongest show of our willingness to change the Uber business model in order to create a regulated solution, as we believe that changing our business model is the right thing to do," Uber said in a statement. The suspension takes effect Friday, it said.
The San Francisco-based company also announced that its up-market ride-hailing service, UberBlack, would in future only serve foreigners, those aged over 65, the disabled, and government and municipal officials. Under South Korean law, unregistered drivers soliciting passengers using private or rented vehicles may only carry those categories of passengers. Penalties for drivers picking up unauthorized passengers include up to two years in prison or fines of up to 20 million won.
Officials were skeptical of whether Uber really intended to comply with the law. "Technically, Uber's new policies have no illegal element, but we would have to monitor if that's how it is run in reality," said a Seoul city official, who didn't want to be named.
In December South Korea indicted Uber CEO Travis Kalanick for allegedly flouting local transportation laws, and in January the Korea Communications Commission filed a formal complaint accusing the company of violating communications laws. Both cases are still in progress, the official said.
UberTaxi, an Uber service that hires registered taxi drivers, complies with the law but has not performed well because not many taxi drivers are willing to work with Uber, the official said. Uber declined to say how many cab drivers registered for UberTaxi.
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