I can’t figure out why Uber is so valuable. Someone who wants to find out what are the nearest available pizza vendors can open up Apple or Google Maps and see. If Uber/Lyft/et al. develop profits that are significant by Apple/Google standards what stops Apple and Google from adding “nearest available transportation providers” to their respective maps applications? Then they establish a commission for that service that effectively takes all of the profit out of Uber/Lyft/et al. Why should I have two Maps applications on my smartphone, one that shows 50,000 different types of businesses (Apple Maps, e.g.) and one that shows just one type of business? (Uber, e.g.)
14 thoughts on “Why can’t Apple and Google take all the profit from Uber, Lyft, et al?”
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I’ve been wondering the same thing. I seriously doubt Uber will be able to exercise much pricing power in the long term. Uber can probably make respectable profits from the small market for premium cars, where branding matters, but the taxi-replacement market where UberX, Lyft, Gett, Via, and so forth compete is a classic race to the bottom.
What makes you think any of these companies is making a profit in the first place? It looks like they are all burning through VC money trying to grab market share in a market that isn’t very defensible in the first place.
I was wondering the same thing until few months ago when I heard about their plans to do self-driving cars. Now there is one in the wild.
http://inhabitat.com/uber-test-car-conducting-early-research-on-streets-of-pittsburgh-for-future-self-driving-taxi/
Also it’s interesting Google Ventures has invested in Uber
https://angel.co/uber
https://www.gv.com/portfolio/#mobile
plus, the legal landscape Uber is confronting especially in Europe for this concept of ‘nearest available transportation providers”
http://www.theguardian.com/technology/2015/may/26/uber-pop-italy-order-discontinue-unfair-competition-taxi
Presumably Lyft/Uber have made some effort in verifying and registering their drivers, and access to this data isn’t something Apple/Google has. Presumably another company (or Lyft/Uber) could make this their sole business model, and outsource connecting to passengers to Google etc.
Probably the money from a cab sharing service is not worth the liability involved for a bigger corporation? For example, every untoward incident that occurs while in an Uber cab, whether an accident or whether something more serious (e.g. rape in an India Uber cab) will result in some sort of regulatory action or lawsuit. Besides why would a large corporation put its other income streams at risk if it were ordered to make a big payout?
Same reason Apple and Google cannot steal the business from EBay or Facebook — it is hard to duplicate the network effects. I don’t want just any driver, I want a driver with good Uber ratings from his Uber passengers.
Because is more than just an application connecting the service providers.
When PayPal launched, a lot of corporations could have done what it was trying to do with huge avaibke capital and resources (and existing userbases, say Yahoo mail or Hotmail). however, these profitable potential PayPal competitors were also at a disadvantage of being unable to risk lawsuits. PayPal operated and forces a bunch of changes in the financial regulations which a big corporation cannot risk. Sometime instead of success like PayPal, one can end up like Aereo.
So Uber is not going to see significant competition until the laws settle. Afterwards, Uber will have way more institutional knowledge, relationships and a deep enough market with network effects that Google will find it hard to displace them.
forget Uber, Apple couldn’t defeat Microsoft Office, Microsoft couldn’t compete with Adobe or Intuit though it tried very very hard.
Having never used Uber or Lyft, I would say Uber and Lyft are valuable because
+ They can convince drivers to work as “contractors” not employees
+ They can convince drivers to work for low wages
+ They offer riders a very convenient, valuable one-stop app (order, track, pay)
+ They offer riders some minimum guarantee and value (cars < 7 years old, panic button, feedback on drivers)
+ They are bundling up serious lobbying power
Google could do all that, but that's more than just launching a "nearest driver" service.
I would love to be a fly on the wall in meetings at either Uber or Google or Mercedes when they speak with lawyers and insurance companies about self-driving cars.
All of the above comments make sense, but I wasn’t suggesting that Google/Apple would entirely replace Uber/Lyft. More that Google would have deals in place with Uber/Lyft/et al. where the drivers and ratings from those companies would show up in Google Maps and Google would receive a commission in the event that a user booked a ride. The point of the original posting was that the commission for the map application provider should eventually equal most of the profit from running a pseudo-taxi network due to the fact that Uber/Lyft/etc. are commodities.
Related, SWA like Uber competes on price, and yet SWA doesn’t allow itself to be listed on any travel website other than its own.
Hipmunk doesn’t list SWA at all.
Google Flights lists the flight times, but not the prices.
I suspect this wins for SWA because they know loyal customers will first at SWA site then hipmunk/google, or only at SWA site, and that’s more valuable to them then being listed as one of many competing airlines offering pretty much the same service and having to compete on flight times, non-stops, etc.
My guess is Uber would not let Google list it until Google is listing Yellow Cab, et. al., and Yellow Cab has dramatically reduced fares. Until then, Uber knows that with its brand and pricing, users will still look up the Uber app first, then use Google second.
Why doesn’t GM, Ford, Toyota, etc. have their own gas stations? Their own tires or battery shops? How about their own car wash islands? Those are not a core business they got the time to be in. The same is true for Google, Apple and many other such businesses.
I believe that management of Uber/Lyft would not make the strategic mistake of inserting a powerful intermediary between themselves and the customer.
From a user experience perspective, we are more likely to see focused apps do better in the near future given the constraints of the screen space and input methods. Too much data is difficult to surface in the maps app.
If I were to guess how Uber or even Amazon loses customer relationship, then it is Apple/Google (or Android) Pay which handsover the customer name, address and payment details to app. That takes away the incentive to create an account in the underlying service for the user. That way a smartphone OS could simply auction the transaction to any commodity provider.
I don’t see how their %20 cuts of the fares are sustainable. Even with just Uber and Lyft (never mind automation to do the comparisons), they’re bound to see their margins chip away as they compete for drivers and riders.
philg: «But I wasn’t suggesting that Google/Apple would entirely replace Uber/Lyft. More that Google would have deals in place with Uber/Lyft/et al. where the drivers and ratings from those companies would show up in Google Maps and Google would receive a commission in the event that a user booked a ride. »
Google Maps already does a simplified version (estimated time, but no driver info) of this:
http://blog.uber.com/googlemaps
I doubt they’re doing it for goodness of heart, but if no commission is being charged, it’s perhaps because they’re investors?