Lyft Expands While Uber Reels

Put aside Chance the Rapper’s Grammy win and in-song references to the name-brand ride-hailing app, and the past 30 days haven’t been a great for Uber. This past month, the San Francisco-based tech giant suffered one publicist’s worst nightmare after another, and its competitors are taking notice. While the company nearly synonymous with ride-hailing spends more and more time improving its image, cross-town rival Lyft announced yet another expansion, setting up operations in 94 additional cities since the start of 2017.

Companies like Uber and Lyft, along with smaller players like Gett and Fasten, have captured plenty of attention over the past few years, both from consumers eager to abandon the uncomfortable, expensive, and cumbersome taxicab industry, and automakers intent on understanding—and profiting from—a burgeoning sharing economy.

Ride-sharing is a nightmare scenario for automaker executives, but ride-hailing might just be a golden ticket. The idea that an individual would cease to require a car of his or her own and could instead sign up for a service that would provide short- or long-term rentals, effectively reducing the number of cars on the road and in individual driveways, doesn’t exactly mesh with companies in the business of selling cars. Change “sharing” to “hailing,” however, and suddenly car companies have yet another avenue to profit.

On the surface, companies like Uber and Lyft appear disruptive to the auto industry. But these ride-hailing apps still rely on cars to function, and most require drivers to own relatively new models. Although Uber appeals to millennials as a means to get out of the house, it’s not a favorable commuting method, with only 1% of college grads expecting to use a ride-hailing service to get to and from work. In short, shoppers are thrilled to have Uber as a convenience, but they aren’t going to stop buying cars anytime soon.

Combine the success of ride-hailing with the lack of growth in ride-sharing, and companies like Uber are increasingly attractive to automakers. Ford continues to market itself as a mobility company, rather than just an automaker. General Motors has invested in Lyft (while also introducing its own ride-sharing platform, Maven), Volkswagen has partnered with Gett, and last year Toyota threw its weight behind Uber.

But while ride-hailing continues to take off, not all companies are enjoying a smooth flight. Amid the controversy of President Trump’s immigration ban and New York City’s taxi strike, #DeleteUber began trending, and nearly 200,000 users uninstalled the app from their phones after Uber eliminated surge pricing to JFK Airport. Later in the month, former Uber engineer Susan Fowler’s blog post detailing her experiences with sexual harassment went viral, and #DeleteUber has been lighting up ever since.

As if things couldn’t get worse, Waymo—Google’s foray into self-driving-car technology—sued Uber over stolen intellectual property. Specifically, a former Google employee on the self-driving project, Anthony Levandowski, co-founded Otto—Uber’s self-driving technology arm—and allegedly brought with him nearly 10 gigabytes of research and information developed at his old job.

As Uber continues to reel from its February from Hell, Lyft and other ride-hailing apps are enjoying the short month in heaven. After earning some public-relations points during the first #DeleteUber campaign by donating $1 million to the ACLU, Lyft has bolstered its business by adding 54 new cities in February (after 40 in January) and otherwise staying out of the spotlight.

Likewise, Fasten, a Boston-based company, secured exclusive rights to this year’s South by Southwest festival in Austin, TX—a city Uber was squeezed out of last year. While Fasten doesn’t have much name recognition (even in its home city), the move on Austin proves competition still exists in the ride-hailing business, even for smaller players.

Which ride-hailing app do you prefer?

-Matt Smith

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