Alphabet mounts challenge to Uber, Lyft
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Alphabet mounts challenge to Uber, Lyft

In 2013, Silicon Valley titan Alphabet acquired the Waze app – an Uberesque piece of software that lets regular drivers buddy up with commuters who need a ride. The service was trialed in San Francisco last year, but now Alphabet are pushing it to the next level and hope to “dramatically expand” it into “several U.S. cities and Latin America over the next several months.” This is a direct challenge to similar services like Lyft and Uber – and it’s much, much, cheaper than its competitors.

Interested in Waze? Here’s the low-down:

Alphabet have learnt from others mistakes – riders will only pay drivers 54 cents per mile, meaning no one will be able to treat the app like a job. This is the IRS-approved rate that people can claim for business travel when using their own car, and it massively undercuts Uber, which often costs a dollar or more per mile (significantly more, during surge pricing).

It’s also true that there’s a little more to Waze: as much as the app is about hitching a lift and paying other people’s fuel bills in return, it’s also a platform to share information about traffic delays in real time. This fuller service makes Waze not so much a taxi-replacement as a genuine attempt to make travelling by car better and more efficient.

Waze isn’t a serious challenger to Uber yet – hitching a lift is one thing, and it’s not the same as getting taken wherever you want to go. The low charges mean that Waze couldn’t evolve into the type of taxi-replacement that Uber and Lyft are, even if it wanted to. The pricing is also a barrier to numbers: as of yet, just not that many people are using the app, and that could be down to a lack of financial incentive.

The other side of that equation, however, should worry Uber. Once the idea has caught on, in busy metropolitan areas where lots of people are going the same way, a low cost alternative could be tempting – and, if you’re a driver who drives miles and miles to work each day… well, it might not be bad to have someone else pay for your gas.

Dominion holds Alphabet in its Global Trends Managed Fund.

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