In this blog post, we examine the safety, legal, and market issues raised by Uber’s introduction in Korea, as well as the need for regulation.
Uber’s Service and Its Introduction in Korea
Uber is an IT-based transportation brokerage service that connects passengers and drivers through a smartphone app and location-based services. Users enter their pickup and drop-off locations in the app, and a registered driver arrives in a luxury sedan; upon reaching the destination, the fare is automatically charged through the app. Since the official launch of the service in Korea, users have praised it for its convenience and high-quality service, although fares tend to be higher than those of regular taxis.
Legal Controversy and Industry Reactions
Uber is embroiled in a legal controversy in South Korea. The current Passenger Transport Business Act restricts the act of providing paid transportation services to those holding a transport business license, meaning operators without such a license are subject to penalties. Consequently, some local governments have conducted investigations or filed complaints against Uber, while the Ministry of Land, Infrastructure and Transport and the taxi industry argue that Uber is disrupting the order of passenger transportation.
On the other hand, Uber and some in the IT industry define themselves as a “technology platform” or an intermediary connecting transportation providers with passengers, arguing that current laws fail to adequately address this new business model. While this argument highlights the clash between technological advancement and regulation, the absence of regulation does not automatically imply legitimacy.
Passenger Safety Issues
One of the biggest issues raised by Uber is passenger safety. Taxi drivers must pass separate qualification exams and aptitude tests, and are subject to legal driving qualifications and related regulations. In contrast, Uber often delegates driver and vehicle management to local contractors (e.g., car rental companies), and in some cases, the only requirement is a driver’s license—meaning only minimal standards are enforced. As a result, ordinary drivers can operate as Uber drivers, creating concerns about passenger safety.
There are also differences in insurance coverage. While taxis are legally required to carry strict insurance policies related to passenger transportation, vehicles registered with Uber may be classified as rental cars, resulting in different insurance coverage and allowing operators to determine insurance terms at their discretion. Consequently, there may be limitations on the scope of compensation in the event of an accident, and differences in regulations—such as vehicle age limits—mean that Uber drivers are sometimes subject to less stringent standards than taxi drivers. Therefore, Uber has a duty to ensure that it only matches passengers with drivers and vehicles that meet the appropriate qualifications and safety standards for passenger transportation.
Fare Structures and the Need for Market Regulation
Passenger transportation is an industry where consumer harm can escalate when demand fluctuates rapidly; consequently, there is a general tendency to impose public regulation on fares and supply. In the case of taxis, it is common practice to adjust the total number of licenses by service area, and fares are typically controlled according to standards set by the government or local authorities. This serves as a mechanism to prevent a decline in service quality and consumer disadvantages caused by excessive competition.
In contrast, Uber operates its own fare calculation system and applies so-called “surge pricing,” which sharply increases fares when demand spikes. For example, during emergencies such as heavy snowfall, base fares have risen several times higher than usual, causing consumer inconvenience and harm. Furthermore, unlike taxis that follow statutory fares, Uber’s autonomous pricing could undermine fair competition with the existing industry. For this reason, arguments calling for certain regulations on fare policies carry weight.
The Issue of Illegal Commercial Transportation Brokerage
Under current law, commercial transportation using private or rental vehicles is prohibited. Car rental companies are also legally restricted from using their own vehicles for commercial passenger transportation or from brokering such services. Therefore, Uber’s model of brokering commercial transportation using private or rental vehicles poses significant legal risks under the current legal framework.
Although Uber claims to be merely a broker and denies liability, its attitude of evading all responsibility on the grounds that there are no laws regulating brokerage itself could create a loophole in the legal system. Looking at examples in other sectors where brokerage is defined as a separate business and subject to registration and liability requirements (e.g., loan brokerage), brokers bear certain responsibilities regarding the transactions they facilitate and have a duty not to broker illegal activities. In this regard, a regulatory framework for intermediary activities is necessary, whether for Uber or similar platforms.
Overseas Cases and Regulatory Trends
Overseas, Uber has also clashed with the existing taxi industry, and responses vary from city to city. While some cities have banned Uber services, others have legalized them under new business categories such as “Transport Network Companies” and established regulatory frameworks. In Korea, while no final ruling or standard regulations have been established yet, even if Uber’s operations are permitted, key elements such as ensuring passenger safety, fair competition with existing transportation systems, and preventing the facilitation of illegal activities must be strictly regulated.
In conclusion, while IT-based transportation platforms provide innovative and convenient services, allowing legal loopholes and the evasion of responsibility to persist will increase social costs and risks. Therefore, rather than simply banning or unconditionally permitting services like Uber, clear regulations and liability provisions must be established to protect passenger safety and maintain public order. Only then can the IT industry contribute positively to society and grow in a sustainable manner.
