Uber Technologies Inc., whose taxi-hailing app faces regulatory challenges globally, shut down a ride- sharing trial in southwestern Japan after the government called it illegal.

Uber yesterday halted operation of Everyone’s Uber, a program that let users in Fukuoka city share rides, Evelyn Tay, a Singapore-based spokeswoman for the company, said in an e- mailed statement today. Uber will consult the Transport Ministry on ways to structure the program to meet official requirements, she said.

The move is a fresh blow to San Francisco-based Uber, whose ride-sharing functions are under scrutiny in cities from Paris to Seoul. Until now, the company avoided regulatory obstacles in Japan by working with taxi and hire-car operators in Tokyo. The Fukuoka program marked its first expansion outside Japan’s capital, where local taxi firms are pressuring Uber with their own apps.

Customers of the pilot program received free rides, while Uber paid drivers a fee for participating as it collected traffic and usage data. The service was illegal because it let drivers without taxi licenses profit by providing transport, ministry official Hidetaka Sakai said this week.

Uber has said it will revise the compensation model and continue to negotiate with authorities.

The purpose of the program, started jointly on Feb. 5 with the Kyushu Technology Licensing Organization, was to collect data to understand local transportation needs, Masami Takahashi, chief executive officer of Uber’s Japan unit, said in an interview last month.

Uber was able to “collect meaningful data for analysis that will shed light on transportation patterns in various areas (including underserved) of the city,” the company said today in a statement. “In the next phase, we will focus on better understanding specific transportation needs from the data collected.”

Uber’s presence in Tokyo is still small, partly due to increasing competition from apps introduced by local taxi operators and the city’s availability of 50,000 taxis — almost four times the number in New York.

This article was written by Ma Jie from Bloomberg and was legally licensed through the NewsCred publisher network.

Tags: japan, uber
Photo Credit: Limousine driver Florian Bucea checks his Uber service. Zbigniew Bzdak / Chicago Tribune/MCT