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Uber's Japan car service hits roadblock as city cracks down

City officials in Fukuoka are debating with Uber over whether the service is a car-sharing operation or a research project.

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Uber's car service in Fukuoka is under investigation. Uber

Car-hailing company Uber is yet again in hot water. But this time things are a little different.

Officials in the Japanese city of Fukuoka have ordered Uber to suspend its car service after questioning whether the drivers Uber pays are violating the country's ban on unlicensed taxi services, The Wall Street Journal reported Wednesday, citing conversations its reporters have had with city regulators.

Suspension is nothing new for Uber. In tandem with taxi consortiums that see the service as a threat, government officials around the world have argued that Uber, which is available in about 270 cities worldwide, is operating a taxi service and that its offering should be regulated as one. Uber argues it's a technology company that simply matches up riders and drivers through its mobile application.

The company has been hit with cease-and-desist orders in Pennsylvania and Virginia and was forced to suspend service in Nevada and Portland, Ore., in the face of government resistance. The service was also banned last year from Dehli, India, after a passenger was allegedly raped by an Uber driver. Spain, too, has said the service is illegal.

The issue in Fukuoka, however, is a bit different than those it's facing in other places. Uber launched its free pilot program in Fukuoka last month, saying that it was a "research" project and not the standard car-hailing service it provides elsewhere. The company's smartphone app for Fukuoka users still provides a method for linking drivers and riders and Uber still pays those drivers for transporting people around the city, but Uber says that it's a fundamentally different kind of service that focuses on data-gathering and not profit-taking taxiing.

"Our mission for embarking on this pilot program is to understand the transportation needs of the City and its People," the company wrote in a blog post last month. "Through the partnership, Uber will provide anonymized and aggregated trip data to Kyushu University Center for Co-evolutional Social Systems and Fukuoka Directive Council's Smart City Working Group, who will assess needs around mobility services and transportation options in various parts of Fukuoka City."

An Uber Japan spokeswoman told CNET on Wednesday that Uber is paying drivers for the data they collect on the rides and not for actually transporting riders. The company has also indicated that it has no plans to shut down its service, despite its drivers not holding a commercial transport license. Uber will, however, "continue our ongoing dialogue with the relevant authorities to clearly communicate program details and address any concerns," the spokeswoman said.

"We saw this as a unique opportunity to help find a solution and fulfill an important need in Japan's future," the spokeswoman added. "In the month since its launch, we've received high volumes of positive feedback from participating riders and drivers in the program."

For its part, Fukuoka city officials don't care whether data is being collected. Instead, they're concerned that the drivers, who are carrying passengers, don't actually hold a license to do so. The nature of their payment seems immaterial.

Uber's Fukuoka service is the company's second in Japan. In Tokyo, the company provides its standard car-sharing service without the data gathering and dissemination.

In a blog post last month, Uber said it picked Fukuoka for a research pilot program because the city has a "young, growing population that is economically active," adding that the "energy in the city means people are constantly moving around the city." Ultimately, Uber says, its data-gathering could improve travel around the city.

"Uber wants to bring more reliable and efficient transportation to Fukuoka, which will lead to less congestion, CO2 emissions, and DUI accidents, as we're already doing in other cities around the world," the company wrote.

Update, 12:51 p.m. PT: Adds Uber's statement.