Uber’s terrible month continues as Taiwan’s transportation ministry declares it illegal

Taiwan’s Ministry of Transportation and Communications today said it will order Uber to shut down operations in Taiwan unless it obtains a proper business license for a transport company.

If you’ve been following Uber, you can tell where this is going. According to domestic news site CNA, Uber is registered in Taiwan as an “information services” company. The MOTC, however, believes that the company’s service resembles a transportation provider, and has therefore demanded it go through due process to obtain a car transport business license.

The Ministry’s statement comes after months of imposing fines on Uber and its drivers for various violations. CNA estimates that these fines have reached NT$3 million (almost US$100,000) in aggregate.

In Taiwan, Uber offers its signature UberBlack service tier, along with its low-priced UberX cars. Within UberX, both licensed livery professionals and ordinary Janes and Joes (UberX’s peer-to-peer model) are driving vehicles around Taipei.

What will come of this fist shaking in Taiwan? My chips are placed on “absolutely nothing.” Based on Uber’s pattern of behavior in other market, the wheels will keep turning as usual until the highest judicial authorities chime in (as is the case in Berlin), or until a public relations crisis breaks out (as is the case in India). Barring those two forms of setbacks, the company will likely operate in a legal grey area until localities adopt new legal frameworks for transportation network companies.

The real question Uber faces in Taiwan is whether or not demand for such a service exists to justify operations long-term. In Taipei, where taxis are abundant and cheap, the value add of rides on-demand is less than in cities like San Francisco or Paris. Moreover, the transportation network business is almost certainly a long-haul play in Asia. Yesterday, Rocket Internet revealed that Easy Taxi, its global taxi-hailing startup, has exited three markets in Asia, likely due to low returns on investment. That ought to lead one to wonder what returns Uber is seeing in Asia right now, and its commitment to seeing greater returns in the future.