Dive Brief:

• Electronics giant Sony announced plans to launch a joint venture that would develop a taxi service in Japan using artificial intelligence (AI). According to a statement and multiple press reports, Sony will partner with six taxi firms in the country: Green Cab, International Automobile, Kusumi Transportation, Daiwa Motor Transportation, Checker Cab Radio Cooperative Association and Hinomaru Transportation.
• TechCrunch reported the service would use AI to manage dispatches and assess demand based on factors including traffic, events and weather. It came hot on the heels of Uber CEO Dara Khosrowshahi’s visit to Asia, where Bloomberg reported he wants more partnerships with taxi companies in Japan.
• The service, set to launch at some point this year, will compete against another taxi-hailing service that uses AI: a partnership between Toyota and app developer JapanTaxi, announced earlier this month. JapanTaxi said it already has 60,000 taxis registered, approximately a quarter of all taxis in Japan.

Dive Insight:

While ride-hailing apps such as Uber and Lyft are widespread internationally, non-professional drivers are banned in major cities from offering services for safety reasons. Instead, Reuters notes, ride-hailing companies can only match users to existing taxi companies. Currently, Uber only operates in smaller towns where there are no taxi companies.

Japan has stringent rules governing the use of ride-hailing apps and autonomous vehicles, but Sony and others are clearly betting that the rules will change in the future and allow such innovations into one of the most technologically forward-thinking countries in the world. It could be an uphill battle, however, given the partnership between Toyota and JapanTaxi that has a stranglehold on the market. And the country's so-called "prince of taxis" Ichiro Kawanabe, chairman of Japan’s largest taxi firm Nihon Kotsu Co Ltd., has been consistent in his opposition to deregulating the industry.

So while Sony’s decision to get involved with the taxi-hailing business might seem a little strange given the growth of ride-hailing apps, it makes sense as they have few other options to gain entrance to the competitive market in Japan.

The use of AI could also breathe new life into a taxi industry that has seen its profits cut into by ride-hailing apps. ZDNet said that the use of AI could make responding to higher demand in peak times more efficient. This could be very helpful in a city like Tokyo, which already works hard to avoid traffic congestion and could see an uptick in customer service if more cabs are available quicker when needed. Perhaps if it works in Japan, such a system could roll out into other countries as well.