With the unexpectedly swift settlement in the Waymo-Uber lawsuit and the promise by Uber CEO Dara Khosrowshahi to change the scandalous culture of the company, it might seem that the “move fast and break things” ethos of ride hailing is coming to end — but that would be the wrong conclusion.
There’s no doubt that the nature of the ride-hailing industry is changing, but that doesn’t mean its disruptive quality will be lessened. The positive PR campaigns and uncritical parroting of company talking points by much of the tech press must be contrasted with the reality that cities say Uber still isn’t cooperating or sharing the necessary data with them and driver compensation was cut by about $2.2 billion in 2017.
The truth is that competition in the ride-hailing space isn’t slowing down, it’s just getting started — not just in the United States, but around the world. And given that studies already show a range of negative impacts from ride-hailing, the war for our streets will likely intensify these trends and make transportation worse for nearly everyone.
In the United States, the competition for the ride-hailing market is between Uber and Lyft; and while Uber commands a formidable lead, it has taken a significant hit due to the #DeleteUber campaign and the string of controversies that eventually brought down former CEO Travis Kalanick. Lyft was estimated to have a 23.7-percent market share in August 2017, compared to Uber’s 74.3 percent, but investor projections that leaked in November claimed it could have as much as a third of the market by the end of that year.
That’s only a small fraction of the competition Uber is facing globally, where a concerted push is being made by other ride-hailing companies to take on the global juggernaut. In 2016, Uber sold off its Chinese operations to Didi Chuxing, the dominant player in China and Uber’s largest global competitor, and it did the same in Russia in 2017, combining its operations with Russian ride-hailing company Yandex.Taxi. However, this shouldn’t be seen as a trend.
After a sizable investment at the beginning of 2018, SoftBank made public its desire to see Uber pull out of a number of markets in Asia and Africa to refocus on the Americas, Europe, and Australia; but Khosrowshahi has denied that Uber intends to follow that advice. That doesn’t mean Uber will have an easy path to dominance in those markets though.
Across the world, regional competitors have risen up to challenge Uber, and they tend to have an advantage because of their roots in the regions they serve — it doesn’t hurt that many have also received significant investments from Didi. But all of these aspects only focus on the growing competition in the traditional ride-hailing model using human drivers. There are also new developments that will cause further disruption for urban residents.
In late 2017, Alphabet’s self-driving vehicle subsidiary, Waymo, announced that it would be launching a limited ride-hailing service using driverless minivans in a suburb of Phoenix, Arizona, and the state has approved its application. In the settlement of the Waymo-Uber lawsuit, Waymo took a 0.34 percent stake in Uber, which led some in tech press to opine that the rivalry between the two companies could lessen as a result; but given that Alphabet’s venture-capital arm GV already has a stake in Uber, that seems unlikely. If any company has the capital to break into the US ride-hailing market at this point, it’s Waymo, and that’s exactly what it looks to be doing.
It wouldn’t be surprising for Waymo to launch similar limited driverless services in the suburbs of other large southern cities which have a lot of clear weather over the next year or two, and GM has announced plans to offer similar services with its own self-driving fleet beginning in 2019. Uber also wants to have self-driving vehicles on the road in eighteen months, but even Khosrowshahi has acknowledged they would only be able to handle a very small percentage of trips — less than five percent — in the beginning.
- The ride-hailing war is just starting.