(ATTN: REWRITE title, lead; UPDATES with more detail throughout; PHOTOS CHANGES)
SEOUL, 19 Feb. (Yonhap) – A Seoul court ruled on Wednesday in favor of the Tada carpooling service as a legitimate car rental service, in a landmark ruling that will likely support the mobility platform industry.
Seoul Central District Court acquitted Lee Jae-woong, head of car-sharing app operator SoCar, and Park Jae-uk, head of SoCar subsidiary, Value Creators & Company (VCNC), of the charges violation of the law on passenger transport services with the new service.
The two were charged in October 2019 without physical detention for allegedly running an unlicensed transport company.
“The Tada service is provided in a contract that provides users with a tailor-made rental service when needed through per-minute booking. It is a mobile app-based car rental service,” he said. declared the court.
The prosecution previously required one year in prison for each of them and a fine of 20 million won (US $ 16,785) against VCNC.
VCNC operates Tada with vans leased from SoCar. Tada’s app has over 1.7 million users.
“Tada is not guilty. Innovation is the future. I deeply appreciate the court’s wise decision,” Lee wrote on her Facebook account after the decision.
The move is likely to support the mobility platform industry, where the government is seeking to ease excessive regulations as part of its efforts to foster innovative growth.
But the taxi industry is expected to vehemently protest the move.
Tada, which means “to ride” in Korean, was launched in October 2018 and has grown rapidly to become the leading ridesharing service in South Korea. It operates primarily in the Seoul metropolitan area, offering services for 11-seater vans instead of sedans.
The centerpiece of the controversy is whether Tada should be considered a type of car rental service or an illegal taxi service operating without a license.
Taxi drivers claim Tada threatens their livelihoods and violates the transportation law that prohibits hired vehicles from offering rides in exchange for money.
Tada argued that its business is within legal limits based on a written exception that specifically allows rented vans – or vans with 11 to 15 seats – to be offered with drivers.
Local transport laws allow for the legal rental of rental cars with a capacity of 11 to 15 seats with a driver.
The local taxi industry argues that this is an arbitrary application of the rule, unrelated to its original purpose of promoting tourism.
During court hearings, Lee criticized the prosecution for turning a blind eye to developments in the mobility industry and the government’s decision to relax regulations on new technologies.
SoCar, meanwhile, welcomed the court ruling, saying it will allow the mobility platform provider to continue its services into a sustainable future within the limits of laws and regulations.
“We will focus more on improving the comfort of disadvantaged people in terms of transport, improving working environments for Tada drivers and finding win-win synergies between Tada and taxi services,” said SoCar in a press release.