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Uber goes free in Seoul as pressure from city government mounts

The car-hailing service has been operating despite the city's argument that it's illegal. It says its latest move is an effort to establish "a consensus" with government officials.

Uber is now free in Seoul as the company tries to make things work with government officials. Uber

Ride-sharing service Uber is once again offering customers in Seoul a free ride.

Announced Wednesday, the move is the latest attempt by the company -- which provides a car-hailing app that connects riders and drivers -- to offer its service in a city that's proved unwilling to budge on allowing Uber to operate legally.

Uber's service is available in about 270 cities worldwide, but some cities have proved unwilling to accept it. In tandem with taxi consortiums that see the service as a threat, they say Uber is operating a taxi service and that its offering should be appropriately regulated. Uber argues it's a technology company that simply serves as a kind of electronic middleman between drivers and passengers.

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 has also said the service is illegal.

The company says its latest strategy of offering free fare to customers in Seoul is an overture to establish "a consensus" with government officials there. Last year, the company's UberX service was offered as a promotional free service in Seoul. But government officials warned that as soon as Uber went commercial, they would deem the service illegal and start arresting drivers on the spot. They argued that Uber drivers didn't have the proper licenses or insurance to operate and would be charged if found working within the city's limits.

But Uber shrugged off claims that it was violating Korea's Passenger Transport Service Act, and it officially launched its service in early December, with prices lower than those charged by local taxis.

It didn't take long for Seoul to react. Later that month the city indicted Uber and CEO Travis Kalanick for violating a law that prohibits unlicensed entities from providing transportation services. If found guilty, Kalanick could face up to two years in prison or pay a fine of 20 million won ($18,126). The government also enacted a program offering rewards of up to 1 million won (about $911) to anyone who reported drivers operating through Uber.

Initially, Uber remained defiant in the face of Korea's threats. In a statement last year, the company said its service is simply misunderstood because it's innovative. "We think there is collision because Uber is a new concept," a spokesperson said. The spokesperson also pointed to a third-party survey claiming that 90 percent of Uber customers supported the service in Seoul and that 95 percent said that they have recommended, or would recommend, the service to family and friends.

But in January, Uber changed its stance and extended an olive branch to Seoul's government by offering to change the registration system for its drivers. Soon after, Seoul's government turned its back and said it would continue to fight to remove Uber cars from its roads.

On Wednesday, Yang Wan-soon, director of the city of Seoul's taxi and logistics division, told the Reuters news agency that the courts will ultimately decide what becomes of Uber and that officials also need to "consider whether the free taxi service would disrupt existing market order."

Uber did not respond to CNET's request for comment.