On-demand ride service Uber is more fully embracing ride sharing, making it clear in a policy paper this morning that it will offer up services from community drivers in markets in which competing services, like Lyft and SideCar, have gotten “tacit approval” from local regulators.
Until recently, Uber has operated with the help of third-party limo and taxi services to provide drivers who had already received whatever commercial insurance and licensing is needed to operate transportation services in the markets they operate in. But it’s seen competitors quickly crop up with competing applications that provide drivers who aren’t licensed in the same way.
That’s given these so-called ride sharing companies a big advantage, in that they’re not subject to a lot of the same fees and regulations that Uber’s partners are. As a result of using drivers without commercial licenses or fancy black cars, those competitors are able to offer lower-cost services in markets where they compete with Uber.
Today, Uber made it clear that it’s not going to idly stand by and let those companies steal share in markets where local governments and regulators have turned a blind eye to ride-sharing services. The company issued a Policy White Paper on ride-sharing, in which it detailed how it will decide to roll out ride-sharing in a market where Lyft or SideCar has already begun operating, and what safeguards it will provide to ensure a high quality of service.
Uber has said that it will consider offering ride-sharing services in markets in which it operates if a competitor has launched and is operating for 30 days without any direct enforcement against it. It’ll consider that “tacit approval.” But if a local government or agency has shown that it will enforce regulations — as they did against SideCar in Austin and Philadelphia — it won’t offer services there.
As for safeguards: Uber promises a $2 million insurance policy on all ride-sharing trips requested through its platform. And it will provide background checks on all drivers which it promises will be stricter than what is required for commercial transportation providers.
That makes it clear that Uber is serious about competing in the ride-sharing market. While it watched for a year while Lyft and SideCar opened operations in San Francisco, and then L.A. and Seattle — all of which are Uber markets — it won’t stand by any longer.
Presumably, that could give Uber an advantage in those markets, since new entrants will be competing in markets that Uber already operates in. While those ride-sharing services will need some time not just to get their operations off the ground, but also to educate customers about their apps, Uber in many cases will already have infrastructure and operations built out and ready to go, as well as built-in customers who already have the app installed. And, when it comes time to on-board new drivers, Uber should be able to do so pretty quickly.
In other words, 30 days isn’t a huge head start. Uber CEO Travis Kalanick wouldn’t say how long it would take to get ride-sharing up and running in any given city, mostly because it depends on the make-up and supply in the market. But it’s clear that with processes already in place in most metropolitan areas, it could be a matter of weeks for Uber to go from zero to having community drivers ready to go.
The announcement comes just a day after Uber announced it was launching in Seattle, another city where ride-sharing services have begun encroaching on its turf. SideCar has been in the Emerald City since last fall, but Lyft is launching there this week.
In a phone conversation, Kalanick said it was difficult to tell what effect Lyft or SideCar have had in markets where their services overlap, in part because Uber continues to see double-digit growth there. In San Francisco, for instance, Uber saw double-digit growth just within the past week. Part of that could be due to Uber’s own embrace of ride-sharing, however. Kalanick said he has seen substantial interest in the low-cost UberX service since it’s been rolled out.
The only question might be how this affects the third-party, commercially licensed partners that Uber has been working with over the last few years. After all, it’s one thing for them to compete with lower-cost services from other providers, but a whole other thing to have rides going to community drivers within the same app.
Kalanick said Uber has been talking to those partners about this issue, and telling them that Uber needs to offer ride-sharing as a choice if it hopes to compete. “I think it’s better for existing partners,” Kalanick told me. “If we don’t give the consumer choice, the consumer is going to go elsewhere.”
For Uber, making ride-sharing an option means that consumers will use UberX when they don’t want to pay a lot, but hopefully will also use the black car service on date night. According to Kalanick, that means consumers will use Uber “no matter what their transportation need is.”