HEDGING

Beijing says Uber is illegal, but isn’t shutting it down anytime soon

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The head of Beijing’s transport committee made an unambiguous statement today about the car-hailing service Uber’s business model: “Private car operators’ business models are illegal,” said Zhou Zhengyu, addressing reporters in the capital (link in Chinese).

But this seems to have done little to clear up the ambiguity surrounding the future of Uber and its domestic rivals in the country—Uber remains operational in Beijing and throughout China.

Of course in China, just because something is illegal, doesn’t mean it has to stop. The statement is likely just a tactic to give the government leverage on this issue. The authorities will probably eventually regulate and legalize private car-hailing services, and don’t want to kick companies out of town just yet.

What the government doesn’t want is those companies disrupting key services such as transportation without the say-so of the authorities. Labeling them illegal early on provides a useful tool to control disruptive companies, should they need to before they have reached a full set of regulations.

Essentially, Uber has been told that it ought not do what it is doing. Should the government decide to ban private car-hailing apps—well, they’ve been warned. As Quartz has reported before, such gray areas in China is actually a pretty good fit with Uber’s “act first and ask questions later” strategy.

So have the possibilities for Uber in China changed? It doesn’t look like it. Here are three possible outcomes. a) Uber continues to operate and talk of regulations fall by the wayside. b) The government decides how it wants the industry to look and introduces regulations to Uber and its ilk. c) The government decides private car-hailing apps need to go after all.

The third option appears the least likely at the moment, but if that’s what the government decides to do, it will at least have the law on its side.

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