TL;DR: Alphabet may drop $1 billion into Lyft, a contra-Uber move that epitomizes 2017.
The ridesharing wars are showing few signs of slowing down as car makers and technology conglomerates continue to pour money into the space. All are hoping to ensure that they are not left out of whatever becomes the future of transportation.
That big tech shops like Alphabet and Apple care about cars at all might feel odd, but bearing in mind how broad the average technology giant now goes in today’s market to maintain its competitive position, the move isn’t as odd it might seem. Tech companies are pushing their own in-car phone and computer technologies, further justifying their interest in the space.
But mere intellectual consistency doesn’t erase all the ironies. The mega-corps that often fund ridesharing companies also provide a goodly chunk of the supply, with their workforces using the services to get to work. And as every major ridesharing company loses money, the big tech companies paying for their growth are effectively subsidizing their own employees to an extent.
With that, let’s untangle the myriad of ties between major tech corporations and the ridesharing companies they subsidize.
Google-Uber v. Alphabet-Lyft viz Waymo v. Uber
We’ve written extensively on Crunchbase News about the nearly comical level of tie-ups between the ridesharing companies of the world.
For instance, Apple has invested in Didi, the Chinese ridesharing player. Didi itself has invested $1 billion in Uber after the American company folded its Chinese operations into Didi in exchange for an equity stake of the combined entity. Meanwhile, Didi has invested in Lyft, Uber’s chief rival in the United States. Lyft is now reportedly growing its market share.
So where does that put Uber? In its corner was Google (now part of the holding company Alphabet), which invested $258 million into Uber at a $3.5 billion valuation several years ago. But that relationship has famously soured, with Alphabet-subsidiary Waymo suing Uber in a very public manner. And, of course, Alphabet is now threatening to put about four times the capital it spent on its Uber bet into Lyft.
That would put Apple and Alphabet on the same side of the United States ridesharing war. That said, Apple still owns part of Uber through its Didi stake, and presumably Google (an Alphabet company, like Waymo) still retains at least some of its Uber stake. So if the Alphabet wager comes into play, then both Apple and Alphabet could both be on both sides of the United States ridesharing war at the same time.
Makes perfect sense.
But before we close the book on this silly damn space for the day, we need to phone a friend.
Softbank, which is in the middle of one of the most expensive gambling runs in the history of our species, has its sights trained on Uber equity. Maybe.
Axios’s Dan Primack had some good words on the potential deal this morning. Take care to note who comes up at the end:
Lyft! Who would have thought that the perennial number-two player in the United States would become the repository for anti-Uber bets by people that are either cross with Uber (Alphabet via Waymo) or bargain-hunting (Softbank via Saudi Arabia’s money).
All this sums to the fact that there is too much capital seeking return and too few good ideas—at least in proportion. Add in the fact that major tech companies are terrified at being disrupted from the outside, the sums of money available, both intelligent and dumb, is astounding.
Small question: What happens to the torrent of cash needed to keep the global ridesharing market afloat if there is a correction? How many companies could die, how many billions of dollars of value could disappear, and how quickly?
iStockPhoto / Antagain