Fight between ridesharing apps like Uber and Chinese regulators heads to the courts

Taxi and ridesharing apps have been exploding all over China. They’ve also been raising crazy amounts of money – in fact we’ve seen two different Chinese taxi app startups raise big rounds just in this past week. The market is white-hot. But it’s also still highly controversial.

For example, last month China’s Minister of Transport said rather unambiguously that private cars will never be allowed to operate as commercial vehicles. Transit authorities in Beijing and Shanghai, among other cities, have called private-car taxi apps like Uber and ridesharing apps illegal.

Whether or not that’s true could ultimately be a matter for the courts, and China’s first major taxi app lawsuit began proceedings on Wednesday in Jinan. The case concerns a driver named Chen Chao, who has sued the Jinan Highway Transit Management Services Center after being fined for illegally operating an unregistered taxi while he was working for a ridesharing company. Chen and his lawyers argue that particular government body has no authority to levy fines on drivers outside of its organization.

The case has yet to be resolved, but the implications as a precedent for levying – or nullifying – other fines on ridesharing app drivers could be significant. The court finds itself in a difficult position though, as many local and national bodies clearly want to ban or at least regulate and tax these popular taxi apps, but the public is largely in support of them. A poll conducted by China’s Lawcourt Evening News, for example, found that most respondents (53 percent) supported the legalization of taxi apps and almost all of them (85 percent) had used them to ride in a private vehicle at least once before.

And of course, many private Chinese companies like Baidu have invested massive sums of money into ridesharing startups and will want to see them legalized.

The question may ultimately come down to how much influence Chinese transit authorities can wield. China’s courts are not truly independent, and the ultimate decision about what to do with taxi apps will likely be made by someone higher up on the Communist Party totem pole. But court decisions like the one that is coming in Chen Chao’s case could become an early indicator of which way the wind is blowing, and the public response to those decisions could help influence the eventual legislative ruling on this issue.

(Source: Lawcourt Evening News)