Supreme Court rules mobility app Tada was not illegal

Industry

Published: 01 Jun. 2023, 18:56 Updated: 01 Jun. 2023, 19:26

Supreme Court rules mobility app Tada was not illegal

A vehicle with a Tada logo passes in Jung District, central Seoul, on Thursday. The Supreme Court upheld the acquittal verdict by lower courts on Thursday, dismissing the prosecution's charge that the app's van-hailing service Tada Basic did not violate the transportation law. [YONHAP]

The country's top court found car-sharing app Socar and its former executives not guilty of violating the nation's transportation laws, dismissing the prosecution's charge that the app's since-terminated van-hailing service Tada was illegal.

The ruling by the Supreme Court could serve as a landmark decision for up-and-coming car rental and sharing companies as Korea's draconian regulations coupled with strong taxi driver unions have often stood in the way of new services.

Former Socar CEO Lee Jae-woong and Park Jae-uk, former CEO of VCNC, an affiliate of Socar that operated Tada, were indicted without detention in 2019 for operating the service, which was accused of violating the Passenger Transport Service Act with its van-hailing service Tada Basic. Park now heads Socar as CEO.

Tada claimed its service was legal "as a car rental service offering drivers."

The Supreme Court upheld acquittal rulings by lower courts, saying the defendants "did not misinterpret clauses of the former transportation law."

Lee stepped down from his position in 2020 to take responsibility for the suspension of Tada Basic service.

Park took over Lee's position as Socar's CEO.

“It was finally recognized at the Supreme Court that innovation is not a crime,” Lee wrote on his Facebook account on Thursday. “People who did not understand innovation and prevented it still hold power. “[Tada] should be the last case of vested interests cursing and indicting entrepreneurs who create changes or changing laws to ban innovation.”

The Korea Startup Forum, a non-profit organization that has more than 2,025 startup members and partners, welcomed the Supreme Court’s verdict.

“It was a natural decision, but the Tada Basic service has already disappeared from the market after being stigmatized as ‘illegal’ by the investigative authorities and was closed down after the implementation of the revised bill, the so-called Tada Prohibition Act," the organization said Thursday.

“Many startups’ efforts for innovation are still being obstructed by old regulations and opposition from the upper class. We hope for the uttermost attention and support from the government and National Assembly so that Tada’s case does not repeat itself.”

Lee founded Socar as a car-sharing service in 2011. With Socar's affiliate VCNC, Lee released Tada in 2018.

Lee Jae-woong, former CEO of Socar, is pictured in front of the Seoul Central District Court in Seocho District, southern Seoul, on Sept. 29, 2022. [NEWS1]

Tada Basic service was Tada’s main revenue stream by offering 11-to-15-seat vehicles, along with a driver. Its operator VCNC used rental cars from Socar and matched drivers with app users.

VCNC indefinitely terminated its Tada Basic service in 2020 after a revision to the Passenger Transportation Service Act which prohibited the renting of 11-passenger vehicles with drivers for anything other than tourism purposes, mandated that vans be rented for at least six hours at a time and required users to possess boarding passes when renting or returning the vehicles at airports and seaports.

Due to the revised law, Tada Basic cannot be relaunched despite the acquittal verdict.

The revised clause closed a legal loophole through which the van-hailing service had been able to operate without a government license since its launch in October 2018.

Tada still provides services such as Tada Light and Tada Next, which do not violate transportation laws.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]