Are the days of Lyft’s “nicer” company status over? A new lawsuit may put that notion into question. Senior RSG contributor John Ince tackles this new lawsuit, plus changes coming to driver pay in NYC, in today’s round up.
Lyft is no better than Uber [Quartz]
Sum and Substance: Ahead of its initial public offering, Lyft is done playing nice.
Lyft and competitor Juno each filed lawsuits against New York City on Jan. 30 in an attempt to thwart rules that will raise driver wages. Under legislation passed by the city in December 2018 and scheduled to take effect on Feb. 1, ride-hail companies must pay drivers at least $17.22 an hour after expenses. The pay formula uses a so-called utilization rate, which accounts for the share of time a driver spends completing rides compared to time spent idle and waiting for a fare.
In its complaint, Lyft called the new pay rule “the product of arbitrary and capricious rulemaking” and argued it would fail to raise driver wages by depressing customer demand. Juno described the rule as “inherently flawed and fundamentally unfair” and alleged it would “destroy competition in the New York City market.” Lyft spokesman Adrian Durbin said in an emailed statement the pay standard would “advantage Uber in New York City at the expense of drivers and smaller players such as Lyft.”
Uber, which did not file a lawsuit, declined to comment…
My Take: For those out there who believed that Lyft was a kindler, gentler version of Uber, this lawsuit puts that into question. When there’s cold hard money at stake, Lyft is willing to cast aside their ‘nice guy’ image – and put their lawyers into full force to protect their interests.
Hey, they’re just protecting the fiduciary interests of their shareholders – who first and foremost want money – lots of money even though by virtue as their privileged status as a ‘shareholder’ are already very, very rich.
Lyft and Juno say they respect their drivers and want to treat drivers better but their lawsuit does not show that. And would you believe that Uber’s response will actually increase driver pay? (see news below)
[Update] On Friday, Lyft e-mailed drivers the following notice, acknowledging that drivers in NYC will be paid more immediately to reflect the amount that TLC rules require, based on the number of trips a driver gives throughout the week. You can read their full comments here.
NYC’s new driver wage law means the days of cheap Uber rides are over [CNN]
Sum and Substance: Starting today, drivers for certain ride-hail apps in New York City will see a significant pay bump, while drivers for other apps will not. In many cases, they will be the same driver since New York City drivers typically moonlight for multiple apps. If that sounds like a hot mess, it’s because it is.
This confusion is the result of an 11th-hour push by two companies, Lyft and Juno, to disrupt the implementation of a new law mandating higher wages for drivers. Under legislation passed by the city in December 2018, which is scheduled to take effect today, ride-hail companies must pay drivers at least $17.22 an hour after expenses. The pay formula uses a so-called utilization rate, which accounts for the share of time a driver spends with passengers in their vehicles compared to time spent idle and waiting for a fare…
My Take: Meanwhile, Uber has taken a vastly different approach to the NYC law. They’re going to raise prices so that they more accurately reflect true costs. There are a lot of complexities to the pay formula, but suffice it to say that it works out better for Uber than Lyft, Via or Juno.
Because of that, and because of some smart PR maneuvering, Uber comes out on top in this battle, even though they’re raising rates. Now the big question is: Will passengers flock to Lyft, with their lower prices?
Starbucks Expands Uber Delivery Venture to San Francisco, London [Bloomberg]
Sum and Substance: Starbucks Corp. is expanding its venture with Uber Eats, offering delivery in San Francisco followed by expansion into other major U.S. cities and rolling out a new test program in London. The service will start in San Francisco on Tuesday, to be followed by Boston, Chicago, Los Angeles, New York and Washington D.C. “in the coming weeks.”
Starbucks is planning to bring delivery service to nearly a quarter of U.S.-owned stores in seven cities this spring, the company said in a statement Tuesday.
The announcement builds on a trial run that started in September in Miami. Almost all of Starbucks’ menu items will be available with delivery times of within 30 minutes — and an initial $2.49 booking fee. The coffee chain is planning to test delivery programs in other countries this year, with London being the first European city targeted for a pilot later this month.
My Take: This is the kind of partnership that makes sense for Uber. Why? Because it’s a much cleaner, simpler model. You’re only negotiating with one party rather than hundreds of restaurants. Will it work? The Uber brand is powerful… and combining it with the Starbucks brand makes it even more powerful.
Readers, what do you think of this week’s round up?
-John @ RSG
