Uber and Lyft are taking on Google Maps
A few months back, I made the case that Ride Sharing services like Uber and Lyft don’t have the required expertise to dominate urban mobility, and that Car Rental companies, Car Manufacturers and Car Sharing Platforms are better positioned to win.
No argument is complete without a counter-argument. Recent M&A activity in the mobility space also triggers the need for an update.
Here are a few examples of what’s happened so far in 2018:
- Uber acquired JUMP, a dockless electric bike sharing service for $200M
- Uber and Lyft seem to be in a bidding war for Motivate, the parent company of CitiBike and GoBike
- Uber and Lyft are both getting into electric scooter services through acquisitions and partnerships
- Lyft has announced they’ll provide public transportation options in their app, which Uber has also been working on
- Uber is launching car sharing through Uber Rent, by partnering with Getaround
The result?
Depending on what city you’re in, ride sharing services now offer cars, bikes, scooters, helicopters, boats, rickshaws, along with directions and bookings on public trains and buses.
Essentially, ride sharing services are expanding into multi-modal urban mobility services, getting you from A-to-B using any means of transportation.
Sounds familiar?
Yes, Google Maps and other transportation applications have been integrating multiple transportation options — including public transport and ride sharing — for quite some time.
So why are ride sharing services expanding into multi-model, and will they try to displace Google Maps as the #1 app for getting from A to B? Here’s an illustration comparing value chains of these services.
There are two main lessons to draw from this comparison.
First, Uber and Lyft are digital companies, and they know well that these days you monopolize the value chain by controlling the demand (rather than supply). By providing the best User Experience (UX) and aggregating the demand of users, you can control and modularize the preceding steps in the value chain. So they will try really hard to become the main application you launch when moving around a city.
Second, ride sharing differs from the other transportation services. Owning and operating cars, trains and buses is capital-intensive and labor heavy, at least compared to the pure-digital playbook possible in ride sharing (where drivers own, maintain and operate the cars). So Uber and Lyft are starting with bikes and scooters, which are relatively cheap to acquire and easier to maintain and reposition.
In summary, the ride sharing giants are a) diversifying into the simplest possible adjacent services which are bikes and scooters, b) partnering with car sharing operators, and c) making moves to control the user demand by making their apps fully multi-modal (with public transport included). If they are successful in controlling demand, they will over time be able to modularize car sharing and train/bus services, making everything below the mobile app a commodity.
However, in this new game of multi-modal, Uber and Lyft are not competing with car sharing companies like ZipCar and DriveNow; they’re competing with Google, which through Google Maps and Google Assistant is an entirely different contender.
Urban mobility remains an interesting market to watch.
Greger works for IBM and is based in France. The above article is personal and does not represent IBM’s positions, strategies or opinions.
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