Opinion: Taiwan faces a no-win situation with Uber’s retreat

(By Wikimedia Commons)

(Editorial by Lee Pin-hua, a senior correspondent working for a prestigious local newspaper and specializing in political news and cross-strait relations. Translated by Sophia Yang)

Uber has recently decided to pull out of the Taiwan market starting February 10 and put an end to the tug of war with Taiwan regulators, leaving a no-win situation for businesses or people engaging in the sharing economy and innovative transport solutions, consumers and the local governments themselves.

Taiwan's Ministry of Transportation and Communications showed no mercy to the ride-share service provider by issuing at total of NT$231 million (US$7.38 million) in fines on February 2 alone and revoked Uber's business registration in the country at the same time, leading the company to announce its decision to end the service and to halt a new partnership with a local taxi association, UberTaxi.

Taiwan's government has grappled with the question of whether to legalize the ride-share service as the company lacks a commercial license or commercial insurance to use personal vehicles to give rides and its avoidance of tax on operating revenue. Despite showing good will, the company did not react fast enough to put out the fires, prompting Taiwanese regulators to jump in to order the company to play by rules through many rounds of negotiations and, since mid-2016, imposing heftier penalties, after its three-year presence in the market, as a last resort.  

Comfort, convenience, price, and safety are what passengers all care about. In Taiwan, Uber drivers snatched customers away from their local taxi counterparts with competitive prices, new vehicles, and a time-saving ride-share app. The enraged local cabbies demanded that authorities evict their illegal rivals, while only a few are serious about improving their service.  

Let's imagine a world without Uber drivers. The local taxis would monopolize the small passenger service vehicle business and that hurt consumer welfare, an unwanted scenario in a liberal market economy, as consumers would be left with fewer alternatives and no counterbalance to taxi fare hikes.  

The ride-sharing business model is part of the sharing economy and is unstoppable. Uber's doomed fate is now ringing alarm bells for Airbnb in Taiwan, a home-sharing service which has been an alternative hotelier, and people are watching whether it will follow Uber Taiwan's footsteps.

While technology advances at an exponential rate, the law has been slow to adapt to these changes. If changes in the law lag far behind progress, it will act as a straitjacket on growth and innovation. Are people going to benefit from this scenario? That would be the question.  

 

(Edited by Keoni Everington)