Lyft Seizes Opportunity as Uber Tries to Outrun Troubles

Today’s round up is less Uber, more government – but not in the way you might expect. Today, senior RSG contributor John Ince covers Lyft’s new opportunity against Uber, legislation (or lack thereof) involving self-driving cars, and the battle between unions and Uber/Lyft in Seattle.

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Today, John Ince covers Lyft's new opportunity against Uber, legislation (or lack thereof) involving self-driving cars, and the battle between unions and Uber/Lyft in Seattle.

Lyft seizes opportunity as Uber tries to outrun troubles [CNBC News]

Sum and Substance: Lyft makes a big expansion move, announcing it is adding statewide coverage to 32 states, bringing its total to 40. The company seizes the opportunity to recruit disillusioned drivers. Lyft’s share of the U.S. ride-hailing market in the past two years grew at double the rate of Uber. It has upgraded its smartphone app, stepped up marketing efforts to attract more riders and expanded its U.S.-only service into 160 more cities for a total of about 350.

When management upheaval, allegations of corporate espionage and revelations of sexual harassment sent Uber into a public relations sinkhole, its long overshadowed rival Lyft shifted into overdrive. The company seized the opportunity to recruit disillusioned drivers so it could be more responsive to passengers searching for a ride-hailing alternative to Uber. It upgraded its smartphone app, stepped up marketing efforts to attract more riders and expanded its U.S.-only service into 160 more cities for a total of about 350.

The aggressive tactics cast the much smaller Lyft in a new light. After five years of being content in its role as the fun-loving, pink-mustached underdog of ride hailing, Lyft is proving to be a wily opportunist and a more imposing threat to Uber.

But a huge chasm still separates the foes in terms of financial resources, ridership and breadth of operations. While Lyft’s rides are in the millions per year and only in the U.S., Uber makes 10 million trips per day worldwide and has carried more than 5 billion passengers in over 80 countries since 2009. Uber has raised nearly $14 billion in capital since its inception, compared with Lyft’s $2.6 billion. For its part, Uber is doing all it can to keep its lead. … Yet the ground that Lyft has been gaining can’t be ignored. By the time Uber’s board ousted abrasive CEO Travis Kalanick in June, Lyft had more than doubled its ridership from the first six months of last year. At the end of June, it had passed 2016’s full-year ride total of 162.5 million.

To be sure, Lyft already was growing fast before Uber went into self-destruct mode. Lyft’s share of the U.S. ride-hailing market in the past two years grew at double the rate of Uber, rising from 12 percent to just over 30 percent, according to Lyft’s internal metrics.

… Nick Raef, 23, who works at Northwestern University near Chicago, considers price and brand image each time he chooses between Uber and Lyft. Service in Chicago, he says, is close to even between the two. But if Uber happens to be misbehaving on a particular day, he’ll go with Lyft even if it’s more expensive. “I’ve told myself this controversy is worth a dollar or $2 depending on how bad the story was that day,” he said.

My Take:  This is the story line we’ve all been anticipating for some time now – Lyft capitalizes on Uber’s mistakes to seize market share. But if my personal experience of a driver is any indication, I’m still not buying the narrative.  When I turn on both apps, invariably Lyft involves longer pickups – which mean there is less demand and fewer drivers on the Lyft platform.

While Lyft passengers may be a tad nicer, that’s hardly a decisive factor for me. The Quest offers I receive from Uber are considerably more attractive than the incentives Lyft offers. Uber offers a $120 bonus for completing 25 rides in a weekend with a 75% acceptance rate while Lyft offers a $140 guarantee of net earnings (actually just over $100 after Lyft commission.)  Uber’s offer is in addition to my total earnings, while Lyft’s offer is the total compensation.  So from this driver’s perspective, Uber still pretty much has a lock on this market – more passengers and more drivers making more money. What’s it like in your market?

U.S. House unanimously approves sweeping self-driving car measure [Reuters]

Sum and Substance: The U.S. House on Wednesday unanimously approved a sweeping proposal to speed the deployment of self-driving cars without human controls by putting federal regulators in the driver’s seat and barring states from blocking autonomous vehicles. The House measure, the first significant federal legislation aimed at speeding self-driving cars to market, would allow automakers to obtain exemptions to deploy up to 25,000 vehicles without meeting existing auto safety standards in the first year. The cap would rise over three years to 100,000 vehicles annually.

Representative Doris Matsui said the bill “puts us on a path towards innovation which, up until recently, seemed unimaginable.” Automakers, business groups, and advocates for the blind praised the House measure. But one consumer group said the House bill did not do enough to ensure self-driving cars would be safe. Under the bill, manufacturers seeking exemptions must demonstrate self-driving cars are at least as safe as existing vehicles. States could still set rules on registration, licensing, liability, insurance and safety inspections, but not performance standards.  Automakers would have to submit safety assessment reports to regulators, but the bill would not require pre-market approval of advanced vehicle technologies. The measure now goes to the Senate, where a bipartisan group of lawmakers has been working on similar legislation. Automakers and technology companies, including General Motors Co and Alphabet Inc’s self-driving unit Waymo, hope to begin deploying vehicles around 2020. They have been pushing for new federal rules making it easier to deploy self-driving technology, but some consumer groups have sought additional safeguards.

Current federal rules bar self-driving cars without human controls on U.S. roads. States have issued a variety of different rules in the absence of clear federal guidance, and automakers have complained that California’s rules are too restrictive. U.S. senators might circulate their draft legislation this week. One sticking point is how to handle commercial self-driving trucks, which are not included in the House measure. The Senate version may also soften the provisions preempting state rules. Volkswagen AG (VOWG_p.DE) and other automakers have been lobbying Congress to act, often bringing test vehicles to Capitol Hill so lawmakers can test out driverless cars. Advocates hope self-driving cars can help reduce U.S. road deaths, which rose 7.7 percent in 2015, the highest annual jump since 1966. The U.S. National Highway Traffic Safety Administration said in a 2014 study that U.S. traffic crashes cost society $836 billion a year in economic loss, with human error behind 94 percent of crashes.

Consumer advocates want to give the National Highway Traffic Safety Administration quicker access to crash data and more funding to oversee self-driving cars. “The autonomous vehicle bill just passed by the House leaves a wild west without adequate safety protections for consumers. It pre-empts any state safety standards, but there are none at the national level,” the Consumer Watchdog group said in a statement. The policy group Transportation for America said cities are worried the House “legislation will preempt local authorities from managing their own streets and fail to give local leaders the confidence that manufacturers and operators will be aware of and follow local laws and regulations.”

My Take: While there clearly is a benefit from having the federal government set uniform standards that apply in all 50 states, I’m not a big fan of this bill, especially when there is no pre-market approval required of advance technologies. What’s to prevent unsafe or unproven technologies from being used in situations that could cause bodily harm or death? Like so much legislation in Congress and state houses, the legislators rely on language suggested by the potential beneficiaries of the legislation. That, after all, is why lobbyists outnumber legislators by what … 1000-1 in DC?

Seattle’s landmark Uber-Lyft union law on hold again as court battles continue [Geekwire]

Sum and Substance: Seattle’s controversial ordinance that lets Uber and Lyft drivers unionize is on hold yet again, throwing another legal wrench into the first-of-its-kind law, which has been facing challenges since it was passed last year.  The law has fended off several of those challenges: Most recently, the two remaining lawsuits were thrown out and a delay on enforcing the law lifted. With that, it looked to be smooth sailing for the city to implement the landmark law and require companies like Uber and Lyft to hand over driver contact information to union representatives by today, Aug. 30.

However, now that milestone has been wiped away by the 9th Circuit Court of Appeals thanks to a temporary injunction granted Tuesday. The plaintiff in one of the lawsuits against the ordinance, the U.S. Chamber of Commerce, asked for the injunction as part of a request to delay implementation of the law until the appeal has been decided. The injunction stays in place until the court decides whether or not to delay the ordinance during the appeal process.

That conflicts with a separate decision last week, from U.S. District Court Judge Robert S. Lasnik, that cleared the way for the city to resume enforcing the law. In addition to the chamber case, a group of 11 Uber drivers represented by the National Right to Work Legal Defense Foundation are appealing yet another decision by Lasnik to throw out a lawsuit they filed back in March. “This scheme is simply a union power grab by the Teamsters who are looking for more forced union dues, and it violates federal law and these driver’s First Amendment rights,” said Mark Mix, president of the foundation. “Further, permitting ridesharing drivers to be forced into a union monopoly would end the flexibility that attracts many independent drivers to work with Uber and Lyft. We are committed to defending the rights of these drivers who want nothing to do with the Teamsters union.”

As the legal gears continue to grind, drivers both for and against unionization are making their voices heard. Teamsters Local 117, the sole group certified to represent drivers, said in a press release that it will continue to fight to unionize drivers.

… Today, drivers associated with a group founded by Uber and Eastside For Hire called Drive Forward are protesting at Seattle Municipal Tower what they say is a refusal by the city to adjust its rules to allow more drivers to vote on unionization. This isn’t the first time the group has picketed in Seattle, as drivers showed up at City Hall in January to voice their opposition to the ordinance. …

The distinction of which drivers get to vote on collective bargaining continues to be the key issue for many opponents of the law. New drivers who have been with their respective ride-hailing companies for less than 90 days do not get a vote. Drivers also need to have made 52 trips starting or ending in Seattle during any three-month period in the last year to be eligible. Ride-hailing companies like Uber and Lyft favor giving every driver a vote, without the type of restrictions in Seattle’s rules. In a blog post Tuesday, Lyft said that these rules would disenfranchise approximately 70 percent of its drivers, and for Uber, that number is about half.

My Take:  It’s tough to distinguish the good guys and the bad guys in this unfolding battle. Unions are by no means clean of all stains of corruption. But without a unified voice to speak to Uber and Lyft, it’s unlikely that these companies will yield on measures of fundamental importance – measures that affect their bottom line in a material way. In the meantime, as this legislation winds its way through the courts, the PR machines on both sides of the issue go into high gear.

Readers, what do you think of this week’s round up? What do you think of the self-driving car legislation?

-John @ RSG