Uber business model faces legal scrutiny in Taiwan, Chongqing

Uber Technologies Inc is under fire in Taiwan and Southwest China's Chongqing over concerns that it and its drivers are not appropriately licensed, adding to a string of official complaints aimed at the fast-growing US start-up.

Uber has been subject to similar action in economies as varied as Thailand and Spain. But an investigation in Chongqing marks the first time Uber's legality has come under scrutiny in the Chinese mainland.

Uber, through its apps, charges a fee to play matchmaker between passengers and drivers, some of whom are registered taxi drivers.

But a lack of regulation for the relatively new business model has brought Uber and similar taxi-hailing companies to the attention of authorities worldwide.

In Taiwan, the transport administration said Uber is licensed to provide information services rather than transport.

As such, the local administration is investigating whether it has the authority and enforcement capabilities to block access to Uber's website and mobile apps.

"It's quite vexing as there's no precedent for this kind of issue," a deputy director of the transportation administration said.

In a separate statement on Monday, the Chongqing government said it was investigating the legality of Uber's business model using private drivers. It said private drivers operating without a commercial license would be "classified as illegal behavior."

It said it would fine unlicensed drivers operating via car-hailing services 30,000 yuan ($4,826) to 100,000 yuan. It did not state any action against car-hailing service providers.

Uber, valued at around $40 billion, operates in eight Chinese mainland cities. Chongqing, where it has been carrying out a free trial, would be the ninth.

"We are actively communicating and seeking clarification with the Chongqing government," Xue Huang, communications lead for Uber in China, said in e-mailed comments to Reuters.

The company did not respond to a request for comment regarding Taiwan's announcement.

Monday's announcements add to an array of challenges that have hit the San Francisco-based company in recent weeks

As well as bans in cities around the world, Uber has faced accusations of violating user privacy and has had to tighten screening after a driver in India was arrested for rape.