Uber, a global mobility platform, has launched a renewed offensive in the Korean market. After the withdrawal of the ride-sharing service UberX in 2015, which had been maintaining a presence in the domestic market, Uber is now focusing on restructuring its services and aggressively expanding its market share. According to industry sources on the 16th, Tony West, Uber’s Chief Legal Officer (CLO), made a private visit to Korea at the end of May. Tony West, who previously served as Assistant Attorney General at the U.S. Department of Justice during the Obama administration, plays a key role in Uber’s business decisions. Following his visit to Korea in 2020, plans were announced to establish a joint venture with SK Telecom’s T Map Mobility, which led to the establishment of “Wooti” in April 2021. Uber’s Korea representatives stated that West’s recent visit was for a routine inspection, emphasizing their efforts to increase their presence in the domestic market through aggressive marketing strategies.
Uber is currently focusing on targeting the Northeast Asian market (Korea, Japan, Taiwan) instead of the already saturated North American market, shifting its attention to regions with growth potential like Asia and Europe. In the past year, while Uber’s revenue growth in North America stayed in the single digits, it increased by about 30% in Asia. Consequently, Uber has introduced a student version of the “Uber One” subscription service that combines ride-hailing discounts with food delivery discounts, including Japan in its initial rollout. They have also launched a service in Japan that allows users to order Costco products through Uber Eats. Moreover, in May, they acquired Taiwan’s top delivery app “Foodpanda” for approximately 130 billion won.
In Korea, Uber is expanding its operations by relaunching its premium service “Uber Black” targeting foreigners and corporate clients. They have revamped their pricing structure and secured drivers to make a stronger push into this market. Uber also underwent rebranding in February, changing its service name from “Wooti” to “Uber.” There are speculations that Uber may acquire the stake of T Map, which is considering withdrawing from the business, to operate independently. Speaking at a press conference on the same day, Song Jin-woo, CEO of Uber Taxi, expressed confidence in Uber’s growth in the Korean market, stating that one can expect a significantly different outlook compared to the past two years.
The more threatening aspect of Uber’s moves is that domestic companies are facing growth stagnation due to regulations. For instance, Kakao Mobility (Kakao) maintains over 90% market share in the taxi hailing market but faces difficulties in exploring new initiatives due to various regulations and pressures from political factions and the taxi industry. The Fair Trade Commission previously imposed a fine of 27.1 billion won on Kakao for “call monopoly,” and the Financial Services Commission’s Securities and Futures Commission is currently reviewing sanctions against Kakao related to “revenue inflation.” Kakao is proceeding to reduce its market domination by introducing a new franchise taxi model that reduces fees and management control.
Other domestic companies are also facing challenges in growing due to regulations. Tada is a prominent example. In March 2020, amid excessive regulation controversies, the National Assembly passed the “Anti-Tada Law” (an amendment to the Passenger Transport Service Act), forcing Tada to give up its core service Tada Basic (vehicle rental including drivers). Following its acquisition by Toss in 2021, Tada is still struggling to turn a profit despite an additional investment of 10 billion won in January, and is exploring a resurgence through restructuring, new services, and marketing investments.
Last year, Kakao Mobility’s revenue was around 600 billion won, while Uber’s wasapproximately 5.17 trillion won. As Uber’s aggressive re-entry unfolds, attention is drawn to the possible cracks in the dominance of Kakao, the market leader in Korea. While users may benefit from intensified competition, concerns arise in the industry that, similar to other sectors, the dominance of domestic companies in mobility could be undermined by foreign tech giants. In fact, since Uber’s expansion in Busan in April, aggressive marketing efforts have led to a decline in the number of calls for Bottaxi, the public taxi platform in Busan, with 154,378 fewer calls than the same period two years ago (452,534 calls). An industry insider remarked, “Just as YouTube dominated the domestic internet ecosystem, there is no law that says the same thing cannot happen in other markets like mobility.”