Ringing alarm on moves against innovation

The government and politicians must never repeat the sin of killing a service of consumers’ choice out of their ill judgment.

The former founder and executives of van-hailing service Tada were found not guilty by the Supreme Court. The top court upheld a lower court’s ruling and acquitted Lee Jae-woong — former founder and CEO of the pioneering car-sharing platform operator Socar — and Park Jae-uk, former CEO of VCNC, the operator of Tada.

They were accused by the prosecution of running an illegal ride-hailing service with a fleet of vans four years ago. The Supreme Court has judged that Tada’s vans were different from cabs on call and instead fell in the chauffeured car rental service category under the exceptional clause in the Passenger Transport Service Act, which allows renting of a driver-serviced vehicle for more than 11 passengers. The findings were the same in the first and second trials, as well as in the top court.

The ruling sends a strong warning to mainstream industries that try to block innovations. The dispute over the legitimacy of the Tada service needn’t have gone to court. Ride-sharing in various forms has long been in place overseas. It was stupid to go backwards instead of keeping up with the global trend. After the final ruling last Thurday, Lee, the former CEO of Socar, wrote on Facebook, “The Supreme Court has confirmed innovation is guiltless.”

Despite the final ruling, reviving the former Tada service is impossible. Under the law after the controversy dubbed “anti-Tada Act,” a chauffeured rental car is still disallowed, except for very exceptional cases. The law was passed with bipartisan support after the prosecution’s indictment of Tada. Then Land and Transportation Minister Kim Hyun-mee ironically praised the law for “innovating mobility.” The bill passed through the National Assembly despite a protest from conservative lawmakers.

Consumers were victimized by the ban on Tada. The success of the van-hailing service represented consumers’ will to pay higher prices for quality ride service. New services stir competition and bring new changes to existing services. But because of the government’s “illegal” labeling and outdated lawmaking, consumers were forced to settle with low-quality and all-the-same ride services. The government and politicians alike should be ashamed of sacrificing consumer choices to buy votes from a multitude of taxi drivers.

Tada has been providing the cab-like Tada Next service within the boundaries of the law, but the service has been unable to regain the popularity of the past. The cab industry also has not gained from the elimination of a strong competitor. “Ours must be the last tragedy from damning and indicting an entrepreneur introducing new innovation and changing the law to stop innovation to protect the vested interests of an existing industry,” Lee said. The government and politicians must never repeat the sin of killing a service of consumers’ choice out of their ill judgment.