March 7, 2019 / 10:42 AM / in 16 days

South Korea's Kakao strikes deal for limited-hours carpool, ends taxi union protests

SEOUL (Reuters) - South Korea’s Kakao Mobility has struck a deal with taxi unions that will allow it to run a car-sharing service for four hours daily on weekdays, marking an end to protests by cab drivers who had complained the service would destroy their livelihoods.

The unit of Kakao Corp, operator of the most popular chat app in the country, proposed launching the car-sharing service last year, but was not able to start it amid fierce protests. In fact, two taxi drivers died in separate incidents by self-immolation.

The latest deal comes as a result of a series of meetings between the government, Kakao Mobility and the powerful taxi unions over the past few months, and may be a step forward for South Korean startups that are struggling to navigate stiff regulations and powerful unions at home.

Taxi unions made compromises with the government and Kakao, taking a step back from earlier calls for a ban, Lee Yong-bok of the Korea National Joint Conference of Taxi Association said.

“We had internal discussions, and some of us thought that we should resolve an ongoing social conflict although this fight was about our livelihood,” Lee told Reuters on Thursday.

Taxi unions have accepted a deal allowing Kakao to operate the car-sharing service for only limited hours and proposed the app be embedded with a function to automatically turn off calls during the banned hours, Lee said.

“We also have a learning point that our service was not satisfying enough for customers,” Lee said.

A recent survey of about 500 South Koreans by Realmeter shows about 60 percent support the car-sharing service.

A Kakao official said switching off calls during the banned hours was “not technically difficult”, and that the firm would discuss steps it needs to take to follow the agreement.

South Korea has one of the world’s highest smartphone penetration rates, yet app-based ride-hailing services have struggled in the face of strong unions and tight regulation.

The transport law bans the use of personal vehicles for commercial purposes, but allows carpool services for drivers heading in the same direction during “commuting” hours. Commuting times are, however, not specified by law.

South Korea has about 250,000 licensed taxis and sees about 9 trillion won (8 billion) in annual revenue from taxis, Meritz Securities has previously estimated.

Reporting by Ju-min Park; Editing by Himani Sarkar

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