Uber has reached an agreement—of sorts—with the government of Japan, launching a taxi-hailing pilot that will connect customers on Awaji Island with existing taxi companies.

The pilot service is a “minor victory” for Uber, according to Bloomberg; regulations in Japan restrict non-professional drivers from transporting paying customers. Back in 2015, when the company tried to launch under its traditional model of using non-professional drivers in Fukuoka, Japan’s sixth-largest city, it was shut down.

Since then, Uber has been running a small operation in Tokyo, where the app is used to connect existing black-car drivers with customers. Uber is also authorized to provide rides in the rural town of Tango, where more than a third of the residents are over 65 and the local taxi service went under a decade ago, Reuters reports. In addition, the company has made inroads in Japan with UberEats, currently operating in four cities.

The new pilot service is Uber’s biggest move into the country’s taxi industry (as opposed to the black-car industry), which is worth $15.5 billion, Bloomberg said. Prime Minister Shinzo Abe is hoping Uber will help promote tourism on Awaji Island, a popular location for cyclists and home to 120,000 people. The island is about 47 miles from Osaka, the country’s second largest metropolitan area, after Tokyo.

Taxis in Japan are highly regulated, a fact that some observers say makes Uber less relevant. Bloomberg wrote that although Japan’s taxi fares are among the priciest in the world, they are easy to hail from the street and “usually offer impeccable service, from automated doors to glove-wearing drivers eager to get passengers to their destination.”

This hasn’t stopped other ride-hailing companies from wanting some skin in the game. Lyft president John Zimmer said in April 2018 that “we would love to be in Japan,” but did not elaborate on a timeline. Didi Chuxing, a Chinese-based ride-sharing company that claims to be the world’s largest transportation network company, is also looking to get in on the taxi-hailing market, in partnership with the Japanese conglomerate Softbank (which also owns a 15 percent stake in Uber) and the cab company Daiichi Koutsu Sangyo, Bloomberg said. Sony is working on a rival taxi-hailing app; and Toyota invested 7.5 billion yen ($70 million) in JapanTaxi, which it says is the biggest taxi-hailing app in the country.

Japan is showing no signs of moving toward deregulating the taxi industry, so the Uber pilot, which will run through March 2019, will be confined to professional taxi drivers for now. But the ride app hopes to expand its partnerships with taxi companies nationwide. Meanwhile, the country is making very slow strides toward embracing the sharing economy. Last year, Japan moved to legalize Airbnb rentals—as long as homeowners register with local authorities and comply with any additional local regulations.

“I’m very excited that Uber’s technology will contribute to further enhancing the transit environment of Awaji Island,” Brooks Entwistle, Uber’s Chief Business Officer, said in a statement, adding that it will be “the first initiative of its kind in Japan.”

Rachel Kaufman is Next City's senior editor, responsible for our daily journalism. She was a longtime Next City freelance writer and editor before coming on staff full-time. She has covered transportation, sustainability, science and tech. Her writing has appeared in Inc., National Geographic News, Scientific American and other outlets.

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