Why Having Both Lyft and Uber Around Is Good for Riders
The Uber versus Lyft rivalry came into full view this week when a Lyft spokesperson accused Uber of tampering with their business operations by calling Lyft drivers then canceling at the last minute or taking short rides to pitch the drivers on switching to Uber. If this feels like an example of the way a corporate rivalry is hurting consumers, note at least that the battle for dominance between these two companies has also benefited riders.
The two companies operate similar businesses, letting users summon cars to their location from a phone app, then seamlessly charging their account after a ride. Both are locked in a battle in several cities for the affection of residents.To that end, Lyft’s spokesperson claims that representatives of Uber have been keeping Lyft drivers busy by calling them for rides then canceling at the last minute or requesting short rides during which they attempted to recruit them to Uber. According to CNN:
Bogus requests decrease Lyft drivers’ availability, which could send users to Uber instead. But it’s not just the company that suffers. Canceled rides jeopardize income that Lyft drivers depend on — plus they spend time and gas money en route to passengers who have no intention of taking a ride.
And even when Uber employees don’t cancel, Lyft drivers complain to headquarters that they take short, low-profit rides largely devoted to luring them to work for Uber.
Uber has offered financial incentives to those who lure Lyft drivers to Uber, according to the Wall Street Journal. That would explain why some enterprising few are spending their day taking Lyft rides to pitch drivers and earn commissions. The services are competing to become the dominant choice for consumers, and ability to get a ride when you want one is obviously a key factor in which service you prefer. Having more drivers means having more availability. So the competition over volume of drivers makes sense. Of course, merely shifting the ratio of Lyft drivers to Uber drivers rather than increase the total pool of available drivers isn’t exactly helping customers.
But in general, the competition between these two companies has been good for those of us who don’t have an intense brand loyalty to one or the other. As the Journal puts it:
The two rivals are undercutting each other’s prices, poaching drivers and co-opting innovations, increasingly blurring the lines between the two services.[ …]
Another salvo in their battle occurred last week, when both companies unveiled similar carpooling services within hours of each other. The two offerings, Lyft Line and Uber Pool, will both let passengers ride with strangers and split the bill, lowering the cost of regular commutes.
Consider that Uber has its origins in a black towncar service. The pitch was that you might pay more than you would for a taxi, but you’d ride with convenience and style. Once Lyft got into the low end of the market with ride-sharing—sending drivers in their personal cars to transport riders—Uber quickly followed suit with UberX. Now customers have two options both of which are usually cheaper than cabs and still maintain all the advantages of convenience. You can still take a towncar if you want to, but a lot of people don’t. Consider, too, how the presence of a rival keeps prices down. From the Journal:
The startups also compete in lockstep on pricing. Both companies have squeezed their profit margins to reduce prices and add more customers. Lyft earlier this year went so far as to forgo its 20% commission on rides.
There might be some hijinks between these companies as they snipe at each other and fight for our love. But on the whole, the presence of both of them is empowering riders to play them against each other. It’s a sort of duopoly, and for now, it’s often working to your advantage.