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Alphabet’s Nascent Ride-Sharing Service Ups the Ante Against Uber

It’s less flexible and lacks enough drivers—but it’s also far cheaper.
February 22, 2017

Alphabet is looking to expand its new ride-sharing service, in a move that will position it more squarely than ever as a rival to the likes of Uber and Lyft.

The service, based on the Waze app acquired by Alphabet in 2013, is slightly different from the ride-hailing offers of other companies. It allows regular drivers that use its crowdsourced traffic-monitoring app to buddy up with people needing to hitch a ride across the city.

So that it doesn’t become a job for anyone, riders pay the driver just 54 cents per mile—the IRS-approved rate that people can claim for business travel when using their own car. That's much cheaper than an Uber, which can cost upwards of a dollar per mile, or far more during surge pricing.

Alphabet started testing the service in San Francisco last year, but the Wall Street Journal now reports that the plan is to “dramatically expand” it into “several U.S. cities and Latin America over the next several months.”

Uber will be watching carefully. In 2013, Alphabet’s venture capital arm, GV, invested $250 million in the ride-hailing company. At the time, it made perfect sense: here was a disruptive startup out to change the way we all got around, and an established backer that could provide it with a little money, mapping support, and product integration to help it grow.

But Uber has grown into a behemoth valued at over $60 billion, investing in its own autonomous vehicle technology to keep ahead in an increasingly crowded market. And Alphabet’s new CFO, Ruth Porat, has tightened belts on audacious experiments, forcing Alphabet's own self-driving project, Waymo, to shelve plans to build a car and instead seek commercial success.

Now Uber is testing robotic taxis and Waymo reportedly plans to roll out a competing fleet this year. If both also had successful software platforms to allocate to those vehicles in our self-driving future, then they'd be eagerly eyeing one another's lunch.

But that's a little ways off. Currently, Alphabet’s ride-sharing app remains markedly different from Uber’s main ride-hailing service: it lacks its flexibility and, for now, a volume of drivers to make it an on-demand service. But it’s easy enough to imagine many users being tempted to cut costs with Alphabet’s offering—and driver volumes are likely high enough along popular commuter routes for it to take a share of Uber’s customers in the process.

(Read more: Wall Street Journal, “Uber’s Robotic Taxis Are Headed to San Francisco,” “Alphabet Sets Up a New Company to Commercialize Autonomous Car Technology,” “Google Buys Waze, One of Few Truly Useful Apps”)

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