Disruptive in More Ways than One, Uber in Korea

By Katrin Marquez

Coined by Harvard Business School Professor Clayton Christensen, the term disruptive technology refers to a technology that displaces an existing system or that changes it in previously unforeseen ways. Uber, the app that allows users to forgo taxis in favor of paying less for rides has been described as a disruptive technology. Though clients worldwide seem to enjoy the convenience of the app, its growth has caused a number of issues. This is particularly true in Korea, where Uber has faced great opposition.

In Korea, the struggle started in August 2014 when Uber first launched its services in Seoul. Quickly, taxi drivers opposed the spread of the service, petitioning the city government to ban Uber. The Seoul Taxi Association rejected requests from Uber for negotiation with an official for the group saying negotiations would only be considered after Uber stopped offering services in Seoul, according to a November 2014 report in the Korea Times. By May 2015, legislation that bans private vehicles from being used as taxis was passed, effectively rendering most Uber services illegal. Politicians cited safety concerns as well as Uber’s spotty history concerning customer privacy as reasons behind the legislation, though it was lobbied over potential business loss.

The taxi drivers’ concerns are not unfounded. In an August 2015 report in the weblog Gothamist, a New York cab driver complained that since Uber grew in popularity he went from making about $400 a shift to $250. In the same report, Gus Kodogiannis of taxi dispatcher McGuinness Management stated the company had lost 40% of its business.

While the struggles faced by taxi drivers due to Uber are tangible, for others staunch opposition to services like Uber is the real problem. By allowing anyone who passes Uber’s relatively simple background check and brief tutorial to become drivers, the company lowers barriers for employment. Uber gives an opportunity for people who are unemployed or underemployed to earn money. Such an opportunity may be a boon for the glut of young Koreans who are underemployed. While Uber’s services cannot compensate completely, they may help provide short-term economic relief for those unable to find other work.

Uber claims its drivers can make up to $90,000 annually. While this figure may have been accurate when Uber started, new statistics suggest the current actual salaries of Uber employees may be much lower. Uber drivers are also independently responsible for the costs of gas, car maintenance, insurance, tolls and car rental or financing fees. An investigation for social media company Buzzfeed found that in New York City, the real earned income of full-time Uber drivers is much less than the company advertises, about $31,500.

Concerning the debates between taxi drivers and Uber enthusiasts, some argue the issues revolve around government regulation. In an opinion piece written for the Los Angeles Times and later reprinted in the Korea Times, Matthew Mitchell and Michael Farren argue that the real problems with the taxi industry result from over-regulation that hinders innovation in the industry, thus making Uber an unappealing option for frustrated customers. They use Broward County in Florida, USA as an example of a city that dealt successfully with the problems caused by Uber’s popularity by abolishing frivolous taxi industry regulation. Interestingly, this solution is different in Korea since both Uber and the taxi drivers appeal to the government for redress.

When Christensen first coined the term disruptive technology, his meaning was specific to the ways new technologies challenge old systems; its application to Uber, however, has larger implications. When one looks closely at the causes of debates concerning the legality of Uber, one can see how these causes reflect larger societal issues — the impacts of lobbying on legislation, economic opportunity and the role of government in business and competition. Thus, Uber threatens to disrupt more than the taxi industry’s business model by inadvertently highlighting other issues.