Rivalry Gets Ugly: Uber vs. Lyft

September 2014 by: Alpha Tech

The gloves are off!  Ride sharing and car hiring startups Uber Technologies Inc. and Lyft Inc. are doing anything but sharing the competitive space with what some would call some very aggressive tactics against one another – especially on the part of the much larger Uber.

Competition from a consumer perspective is always welcom as it lowers prices and spurs innovation (much to the displeasure of traditional taxis as we have reported). However, things are starting to get ugly in the case of Uber and Lyft. There have been reports  of aggressive poaching of Lyft drivers by Uber through its campaign Operation SLOG (Supplying Long-term Operations Growth) – the company is apparently offering $250 for referring a new driver to its service and $500 for referring a Lyft driver. Rather more sinister are rumors that Uber employees have intentionally tried to disrupt Lyft’s service: CNN has reported that Uber had alleegedly instructed 177 of its employees to order Lyft rides and then cancel them before the car arrived. Lyft itself claims that Uber employees have ordered and cancelled more than 5,000 rides since October 2013 - both allegations have been denied by Uber.

While both these San Francisco-based startups offer similar services, what sets them apart?  Uber is certainly the larger company of the two, operating in three times as many cities worldwide and with four times as many employees. Uber has received $1.5B in funding against Lyft’s $333M and the story is the same as per valuations: Uber has been valued at over $18B while Lyft has been valued at $700M.

Our Take Competition is a cornerstone of the free market but it can be a destructive force when mishandled - but with almost $2B in combined funding, investors in Uber and Lyft don’t seem to be too fazed.  

While the competition may get aggressive and catty at times (over Twitter), the popularity and disruption these services are creating will have a significant impact on the future of urban transportation. So long as this rivalry plays fair (experts assert that there have been no flagrant anti-trust violations…yet) and is focused on delivering the best possible product and service to clients, we think that a little healthy competition may be in everyone’s interest.