As someone who is keyed into Uber’s activities, I am beginning to notice a tidal shift taking place. Uber wants to be everything for everyone. There was a day when it was Uber vs. Lyft. Who would win?
Back in 2016, it seems anything Uber could do, Lyft could do better. Things sure have changed in five short years. Uber is thriving. They are expanding globally and adding to their product list remarkably every week.
Lyft, on the other hand, seems to be shrinking. Lyft won’t be doing food delivery. Lyft won’t be doing shared rides. Lyft is cutting back on staff.
This article will pose the question, is Uber’s attempt at world dominance good for drivers? If it is not good for us, is there anything we can do about it?
Background
We have laws in this country to prevent companies from becoming monopolies. They are called anti-trust laws. The three major Federal antitrust laws are:
- The Sherman Antitrust Act
- The Clayton Act
- The Federal Trade Commission Act.
These laws are set up to prevent a company from becoming a monopoly. When a company becomes a monopoly, it can charge any price. Since there is no competition, a monopoly can basically do what they want.
In an industry like ours, that could mean higher passenger prices and lower driver pay. No bueno.
What Is Uber’s Vision?
Is it world domination? As shown below, Uber is getting into many different business arenas.
Since Uber already has a global presence, and most people already have their apps on their phones, it makes it easier for Uber to add products and services to their existing customers and expand their reach to new customers. Take a look.
Uber builds out enterprise offering as a business travel option.
Business Travelers
Uber is aggressively working to secure business travelers.
Uber faces off with Instacart to significantly cut healthcare costs.
Food For Medicine Delivery
Uber is working with healthcare providers to get good healthy food to patients.
Cannabis Delivery
Open that Uber app and order cannabis in Canada.
Uber is working toward cannabis delivery.
Video Ads
One way Uber can get profitable is the same way Facebook and Google got so profitable: Advertising.
Article discusses how Uber will no longer show video ads in app.
Car Rental
Need to make some money this weekend? Rent out your car. Soon this will be on your Uber app.
Uber aims to enter the peer-to-peer car-sharing business.
Travel Agency
Living in London and want to fly to Paris for the weekend. Open your Uber app.
Article discusses Uber's new launch of UK flight ticket bookings.
Uber Trucking
Of course, Uber is getting into trucking. It is a natural extension of rideshare.
Uber looks to expand into the trucking market.
Uber Eats
If Uber can deliver people, why not food? Uber takes on DoorDash.
Uber explores deploying delivery robots for Uber Eats.
Rideshare
Uber is dominant in rideshare, with lower prices and shorter wait times. How will Lyft respond?
Article shows that Uber beats Lyft on pricing and wait times.
Green Initiatives
Uber uses green initiatives to generate a strong tailwind for their corporate image.
Uber implements new airport and car sharing discounts for green users.
A Story And A Metaphor
I friend of mine told me a story about an owner of a local pizza restaurant chain. The owner of the pizza company told my friend that all he needed to do was make $50 a day at each of his 50 restaurants. That would be $2,500 per day or over half a million dollars per year. If Uber can make a bit of profit in each of these ventures, it will become a highly profitable company in short order.
A razor company has two ways to make money. One way is to sell razors for $15 a piece once. Razors don’t break. I have not replaced my razor in years. A better way to make money is to sell the blades monthly for $10. In this metaphor, Uber’s app is the razor, and all the products I have shared with you are the blades. This helps me to understand what Uber is doing with all these expansions.
Impact of Dara Khosrowshahi as CEO
Before Dara K, Travis Kalanick served as CEO of Uber. He left under a shadow of controversy.
After Dara K steadied the ship, he began looking for ways for Uber to expand and ultimately become profitable. Profitability has not happened yet, but most experts predict Uber is very close.
The shift I experienced is Uber went from being a company that competed in the rideshare space to an app that can be used in many different spaces. Their reach and existing customer base give Uber a huge advantage over any other companies in any given space.
A good example of this is Uber vs. Turo. Uber is new to the car rental space. However, Uber has an app, and millions of customers who have the app and have a car.
All Uber needs to do is create an additional feature to their app, and they are in business. That is not much of a barrier to entry. It will be interesting to see if Turo survives Uber’s assault.
What Does This Mean For Drivers?
I don’t think this is good for drivers. As Uber gets stronger, it can apply more pressure on Lyft.
Currently, Uber has 74% of the U.S. rideshare market. Lyft and a few smaller competitors comprise the remaining 26% (Source: YipitData).
At what point does Lyft go away?
As Uber moves toward profitability, it can get even more competitive with passenger pricing. If Uber charges significantly less for a ride, Lyft users will shift over to Uber. It’s common sense. Both Uber and Lyft offer the same service.
In many cases, they offer the same drivers. If I am a passenger going to the airport, and Uber charges me $35, and Lyft charges me $50, I will take Uber every time.
Once Lyft is gone, Uber has no reason to keep driver pay at current levels. Uber won’t fear losing drivers to Lyft since Lyft won’t be around any longer.
That is when it will get very bad for drivers. This is why we have anti-trust laws. Monopolies are not good for our economy and national interests.
Can We Trust Uber To Treat Drivers Well?
That is a hard NO!
If you think Uber will treat drivers as anything other than an expense that can be reduced to minimum wage levels, you are wrong.
Uber will lower driver rates so low that most drivers will not want to drive. Only the most desperate drivers will keep driving.
There will be a driver payout which, if Uber goes below, won’t have enough drivers to provide superior service. I don’t know how low that number is, but it is significantly lower than current levels.
For most drivers, even current levels are pretty low, especially compared to where we were five to ten years ago.
Key Takeaways
Uber’s star is on the rise. Uber was one of the original unicorns (a company that reaches a valuation of $1 billion without being listed on the stock market). Dara K has taken a rideshare company and is turning it into a powerful global presence.
As Uber has gotten stronger, Lyft has gotten weaker. This has the potential to alter the face of rideshare driving substantially.
All I can do is hope Lyft makes it. Their new CEO David Risher has been making some changes which indicate he understands his situation.
Let’s see what happens.
In the meantime, I drive, understanding that this probably won’t last much longer. Better get to work on your Plan B. Be safe out there.
