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Lyft Drives Uber Competition With False-Order Allegations

August 12, 2014

Lyft Drives Uber Competition With False-Order Allegations

A Lyft car drives along Montgomery Street on in San Francisco. Photographer: Justin Sullivan/Getty Images

Lyft Inc. and Uber Technologies Inc. are driving their rivalry to a new level.

Lyft, a San Francisco-based ride-sharing startup, released data yesterday that said employees of rival Uber have ordered and backed out of more than 5,000 Lyft rides nationwide since October. In an e-mailed statement, Erin Simpson, a spokeswoman for Lyft, called the situation “unfortunate,” as requesting rides that don’t take place “wastes a driver’s time and impacts the next passenger waiting for that driver.”

Lyft made the allegations on the same day that it re-introduced a commission that it charges drivers. The company in April had suspended the fees it takes, in a bid to attract more drivers to join its service. Lyft said yesterday it will now take a 20 percent commission on every ride this week, with drivers receiving a bonus at the end of the week depending on the number of hours they worked.

Related: Uber Drivers Flock to Hamptons to Gain Partygoers’ Fares

The moves underscore the deepening competition between Lyft and Uber as the companies duel one another in the burgeoning mobile rides market and also try and sustain their businesses. Both startups, which let consumers order rides from their smartphones, are trying to recruit new drivers to expand their services and are rolling out their operations in more cities. The rivalry has spurred tactics including the offer of incentives to poach one another’s drivers and debuting similar services at the same time.

Passenger Services

Last week, the two companies started new features that let passengers share a ride with other passengers who are going in the same direction.

Uber, which yesterday said that Lyft drivers had also tried to recruit Uber drivers, issued a new statement today to escalate its defense. Uber said Lyft’s claims of Uber employees canceling rides are “baseless and simply untrue,” and said that Lyft’s drivers and employees have canceled 12,900 Uber trips over an unspecified period.

“A number of Lyft investors have recently been pushing Uber to acquire Lyft,” an Uber spokeswoman wrote in an e-mail. “One of their largest shareholders recently warned that Lyft would ‘‘go nuclear’’ if we do not acquire them. We can only assume that the recent Lyft attacks are part of that strategy.”

In response, Lyft said in a statement that Uber is trying to deflect attention from its “cancel campaign.” Lyft said its investors, who number more than 100, are all “extremely excited that Lyft is approaching IPO-level revenue.” The company added that it is taking market share and is experiencing 30 percent growth month-over-month.

Lyft’s allegations of canceled rides by Uber employees was reported earlier yesterday by CNN Money.

Uber operates in more cities and has raised more funding than Lyft. Uber is in more than 90 U.S. cities and 42 countries, while Lyft is in at least 68 U.S. cities and isn’t available internationally. In April, Lyft raised $250 million from investors including Alibaba Group Holding Ltd. Uber in June raised $1.2 billion at a $17 billion valuation.

To contact the reporter on this story: Pui-Wing Tam in San Francisco at ptam13@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward


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