As Uber Recedes, Lyft Soars

Join us for our next Youtube Live Q&A session on Monday 2/6/17 at 5pm PST!  You can subscribe to our Youtube channel here and be sure to turn on notifications (instructions here) so you know when we go live.

Harry here.  I try to keep politics off the blog for the most part, but Lyft and Uber are definitely making it tough as of late.  Regardless of which side you stand on the political spectrum though, many of the political issues these companies are facing will have a direct impact on your bottom line as a driver, so it’s important to stay informed.  Lyft saw a huge surge in popularity this week and many drivers remarked to me that they noticed a big difference in ride requests.  So whether you’re driving for Lyft, Uber or both, we’ll try to keep you up to date on all the best driving strategies and just cover the rideshare side of things.

Today, senior RSG contributor John Ince takes a look at Lyft’s latest increase in ridership, Uber’s new partnership with Daimler and a start-up that’s suing the city of Chicago for the ability to advertise to rideshare passengers.

This week we cover Lyft's new increase in ridership, Uber's partnership with Daimler, and a start up suing the city of Chicago.

As #DeleteUber Trends, Lyft Pledges $1 Million to ACLU [Gizmodo]

Sum and Substance: Following Uber CEO Travis Kalanick’s limp response to Trump’s “Muslim ban,” Lyft has decided to put its money where its mouth is. The ridesharing rival announced today that it will donate a million dollars to the ACLU to “defend our constitution.”

Protests gathered at airports around the country yesterday and people were looking to the rich and powerful members of Silicon Valley to take a stand against Trump’s egregious executive order that will affect countless refugees, green card holders, immigrants and their families. Some tech leaders responded more forcefully than others but many seemed to agree that Kalanick’s statement was among the weakest.

Even one of Kalanick’s own developers jumped in. Last night, in response to the CEOs assertion that “people are free to disagree,” Eric Butler, who works on Android development for Uber, tweeted:
Then the New York Taxi Workers Alliance announced a work stoppage tweeting “NO PICKUPS @ JFK Airport 6 PM to 7 PM today. Drivers stand in solidarity with thousands protesting inhumane & unconstitutional.” Uber shut off surge pricing but continued to operate normally prompting social media to explode with accusations of strike breaking. At this moment, #deleteuber is still sitting at the top of the trending topics on Twitter.

Some in Silicon Valley have strong principles while others simply want to make a dollar. Who knows which motivation is driving Lyft to take a stand but they’re grabbing the opportunity. Logan Green, Lyft’s co-founder and CEO, tweeted last night that, “Trump’s immigration ban is antithetical to both Lyft’s and our nation’s core values.” Then the company released the following statement about its planned donation:

The ACLU has become a rallying point of opposition after the activist group successfully persuaded a federal judge to block Trump’s order. But it looks like the donations that are flooding in will be more than necessary because the Department of Homeland Security is refusing to comply with the judges ruling. Every day will bring a new fight.

It’s a bit easier for Lyft to take a stand. Not only is opinion turning against Uber but its CEO is on Trump’s economic advisory board. While top tech executives have argued that its good for everyone if they have the president’s ear, profits are always their main concern. They desire influence in the administration so that they can protect profits. If public sentiment turns against them, there won’t be any profits to protect.

My Take:  Lyft has moved swiftly to take advantage of the blowback against Uber and their perceived alliances with the Trump administration.  This is a battle that’s perfect for Lyft’s carefully cultivated public image.

In a related development, this past Thursday Feb 2, 2017, Uber CEO Travis Kalanick resigned from his advisory role on Trump’s economic council.  In making the move Kalanick said, “earlier today I spoke briefly with the president about the immigration executive order and its issues for our community.”

Kalanick said in the memo obtained by CNN, “I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that.”  Of course, having 200,000 Uber apps deleted just might have been another factor in Kalanick’s decision.

Lyft rides a wave of anger to the top of the App Store [Washington Post]

Sum and Substance: These days, everything is political: even the ride-sharing app you use. This weekend, Uber and Lyft — and their reactions to the Trump administration’s immigration order — illustrated how important a company’s political views have become to consumers. Lyft took a public stand against the order and, on Sunday, saw more downloads than Uber for the first time ever, according to analysis firm App Annie. Lyft’s Sunday downloads also more than doubled its daily average over the previous two weeks.

Uber, on the other hand, had a bad weekend. Hundreds of people called for ride-sharers to ditch the company through the hashtag “#deleteUber” after it announced that it would drop surge pricing for John F. Kennedy Airport trips. Many saw Uber’s move as an attempt to undermine the strike that New York City cab drivers organized to protest the immigration order and capitalize off the controversy — something Uber was quick to deny.

It didn’t help that Uber’s standing among Trump opponents that its chief executive is on the administration’s business advisory committee. As Uber tried to straighten out its PR mess, Lyft managed to capitalize on the anti-Uber movement by pledging to donate $1 million to the American Civil Liberties union over the next four years…. 

The social reaction to the Uber-Lyft divide, while perhaps not permanent, was immediate. App Annie confirmed that Lyft climbed the app charts on both Apple and Android phones this weekend. It overtook Uber to reach No. 1 on the Apple App Store. That bump came despite the fact that Lyft didn’t suspend its service during the strike either, and despite Lyft’s ties to another close Trump ally, investor Peter Thiel. Its pledge over the weekend, however, seemed to speak louder than those facts — and louder than a later Uber vow to devote $3 million to help its drivers with immigration legal costs.

“As of January 29, Lyft moved up two spots to rank #1 for downloads in the Travel category on iOS and moved up one spot to rank #2 for downloads in the Maps & Navigation category on Google Play — Uber remains #1,” App Annie confirmed in an email to the Post.

It can be hard to measure how much effect social media boycotts really have on companies — but there’s little doubt that they are on the rise, said Towns. And companies have to react accordingly. “I think that new rules of business are that you, more often than you have in the past, have to take a stand,” she said. She previously has advised brands not to wade into politics and risk alienating half of their potential customer base. But that’s changing, she said. It’s now becoming important for companies to cultivate identities to which customers can relate — and focus on courting an audience that will agree with a company’s core values.

My Take:  It’s too early to tell whether this surge of app downloading and deletion will have any material effect on the competitive dynamics of ride-sharing.  But one thing is clear: ride-hailing as an industry has become deeply politicized.  No longer can companies stand on the sidelines, while political battles rage outside.

One of the curious aspects of this politicization is that in one set of fights (vs taxi and city councils etc) Uber and Lyft are allies.  In another set of fights (Trump vs anti-Trump)  they’re perceived as adversaries.  The irony here is that, from what I hear from inside sources, Travis Kalanick is definitely no fan of Trump, yet his company has been tarred and feathered by those who have different perceptions.  That probably explains why he has disassociated himself from the President by resigning from the economic council. (See above)

A Startup Is Suing Chicago to Let Uber Drivers Show Ads in Their Vehicles [Chicagoinno.streetwise]

Sum and Substance: A startup that allows ridesharing drivers to earn additional income through advertising inside their vehicles is suing the City of Chicago for its ordinance that prohibits ads inside Uber, Lyft and other rideshare cars. 

Vugo, a two-year-old startup founded by former Chicago resident James Bellefeuille, is suing the city along with the Liberty Justice Center. Both organizations are holding a press conference later today (held at 190 S. LaSalle St., 40th floor) to announce the suit. Vugo and the Liberty Justice Center say Chicago is violating the right to free speech and equal protection under the US and Illinois constitutions by discriminating against ridesharing vehicles in favor of taxicabs, which are allowed to advertise inside and outside their vehicles.

Chicago passed ridesharing regulations back in 2014 that required, among other things, that commercial advertisements not be “displayed on the exterior or interior of a transportation network vehicle” (i.e. Uber and Lyft). Vugo’s business allows ridesharing drivers to set up tablets in their vehicles that display ads to passengers. The startup was founded in Chicago but left the city when it discovered it was not operating legally. The company has since moved to Los Angeles, but has 8,000 drivers across the country using its service, Bellefeuille said.

Drivers can earn an additional $300 a month by displaying Vugo-powered ads, he said. “The fact that the City of Chicago thinks it should be able to regulate the inside of private vehicles kind of blows my mind,” Bellefeuille told Chicago Inno. Vugo is also suing New York City for the same reason. Arguments in the case have wrapped up, but a decision has not yet been made by the judge, Bellefeuille said.

“These regulations unfairly favor the taxi companies at the expense of ridesharing drivers,” Jeffrey Schwab, staff attorney at the Liberty Justice Center, said in a statement. “This prohibition on advertising on or in ridesharing vehicles not only makes doing business in Chicago impossible for Vugo, but it deprives hard-working ridesharing drivers from the opportunity to make additional income.”

My Take:  I’m not a fan of advertising-based business models and I’d be really opposed to having my car become a vehicle for commercial messages over which I have no control.  It’s an imposition on passengers and potentially degrades the experience.  But $300 a month is $300 a month and I can certainly see why some drivers would like this option.

Uber Partners With Daimler in a Step Toward a Driverless Future [New York Times]

Sum and Substance:   Uber is one step closer to its dream of a self-driving future — with a little help from a new partner. The ride-hailing company announced on Tuesday a partnership with Daimler, under which the German automaker plans to build autonomous vehicles that will operate on Uber’s transportation network. The move marks the first time a major automaker will provide its own self-driving vehicles — built entirely in-house and without Uber’s help — specifically to operate on the ride-hailing company’s network.

The agreement is not exclusive, and Daimler may produce autonomous cars for Uber’s competitors, while Uber can also bring other automakers onto what it calls its “open platform” for ride hailing. The two companies said they expected Daimler’s self-driving vehicles to reach Uber’s network “in the coming years.” “Auto manufacturers like Daimler are crucial to our strategy because Uber has no experience making cars — and in fact, making cars is really hard,” Travis Kalanick, Uber’s chief executive, said in a statement. “We can combine Uber’s global ride-sharing network with the world-class vehicles of companies like Daimler, so that Uber riders can have a great experience getting around their cities.” 

Uber has a history of cooperating with automakers to jointly produce autonomous vehicles. The company has worked with Volvo to develop the XC90, a self-driving sport utility vehicle now being tested in Pittsburgh, near Uber’s self-driving research headquarters. Uber has also modified a fleet of Ford Fusion vehicles, outfitting them with sensors and cameras for autonomous capabilities.
Lyft, Uber’s largest competitor in the United States, has also worked closely with a major automaker, General Motors, which is making its own self-driving vehicles for Lyft’s ride-hailing network. Google struck a deal with  last year to work on self-driving vehicles. Uber stands to benefit from the Daimler partnership in several ways. Collaborating with automakers could reduce the perception that Uber is a threat to the sales of the auto industry, for example. The company can also bolster its supply of vehicles to pick up a growing base of riders.

My Take:  Without actually seeing the wording of the agreement, it’s difficult to know whether there’s really something significant here.  Neither party has an exclusive agreement, so no one has blocked off other potential partnerships.  Lyft has something going with General Motors, while Google has a partnership with Fiat Chrysler.  So everyone’s pairing off with someone – assuming that driverless cars will be the big party of the future.  But I wonder how much market research they’ve done.  Passengers and people I talk to want nothing to do with driverless cars.  However, Uber has made yet another big PR slash with this announcement.  Maybe that’s what they’re really after.

Readers, what do you think of this week’s round up?

-John @ RSG