4 ms·

This is when Uber should go back to their investors, ask for $10B and just buy Lyft. Without Lyft Uber will have an easier time to become profitable and avoid

This is when Uber should go back to their investors, ask for $10B and just buy Lyft. Without Lyft Uber will have an easier time to become profitable and avoid a "race to zero" in cities when they compete against each other.

valuearb 10y ago
This would be the greatest news app very for dozens of competitors. 2 years later one is another Lyft, and Uber blew another $10B.
shoyer 10y ago
I imagine there might be serious anti-trust concerns with such an acquisition.
- jacquesm 10y ago
  Why? Neither of those companies has anything even close to a monopoly.
  - Retric 10y ago
    Combined they likely have a lot of local monopolies even if they don't have a national or global one.
    - jacquesm 10y ago
      You mean places where there are no other taxi services, but where Uber and Lyft both have drivers?
    - rahkiin 10y ago
      It seems to me that neither the FCC nor the FTC consider 'local monopolies' as actual monopolies. See: ISPs.
      - adventured 10y ago
        Local monopolies are definitely not uncommon in the US. On a sheer numbers basis, it's very rare for small local monopolies to be pursued on anti-trust grounds, however the majority of US anti-trust cases are made up cases that don't resemble the Microsoft / AT&T / IBM type scenarios. They will occasionally go after small local monopolies, the abuse has to be so great it gets their attention however. You can browse all anti-trust cases here: https://www.justice.gov/atr/antitrust-case-filings?page=1 https://www.justice.gov/atr/antitrust-case-filings?page=1 Here's a typical example, that is a million miles away from something like the Microsoft case: https://www.justice.gov/atr/case/us-v-michael-p-barbour https://www.justice.gov/atr/case/us-v-michael-p-barbour
  - cortesoft 10y ago
    You don't have to be a monopoly to be in violation of anti-trust laws. The Clayton Act says that they can block any merger or acquisition that would 'substantially lessen competition'. Even though they wouldn't be a monopoly, it wouldn't be hard to argue that merging Uber and Lyft would substantially lessen competition. https://en.wikipedia.org/wiki/Clayton_Antitrust_Act https://en.wikipedia.org/wiki/Clayton_Antitrust_Act
    - jacquesm 10y ago
      Good point, that's something that might happen, especially because both are fairly open about using the money raised from investors to subsidize the rides. Size-wise, especially in some locations Uber and Lyft now dwarf the regular taxi services. So you're probably right that this would at least be reviewed and likely flagged down, assuming that such local issues would be enough to raise that flag.
geofft 10y ago
Would that not violate antitrust law? At this point, Uber and Lyft have basically created a market and become the two biggest players in it, and if the "race to zero" as you put it disappears, it's literally prices no longer being competitive and consumers paying higher prices.
tyingq 10y ago
I wonder if the overlap of drivers that do both Lyft and Uber would somehow make Lyft worth less to Uber than it would be worth to a different buyer. I'd heard, anecdotally, that many (most?) Lyft drivers also drive for Uber.
- jonwachob91 10y ago
  The value for Uber acquiring Lyft is in eliminating it's only real competition, which is worth more than any number of drivers and users. That's also why they'd have to pay a large premium over the current $7.5B valuation, such as the $10B suggested by parent. I'm unaware of any transportation companies that could really afford to purchase Lyft.
  - tyingq 10y ago
    Didi might be a contender.
    - dmbass 10y ago
      Didi already has a non-compete pact with Uber (they acquired Uber's Chinese arm from Uber).
      - exhaze 10y ago
        No - this only applies to Uber not operating in China. Didi can still compete with Uber in any other country.
  - bogomipz 10y ago
    Isn't Lyft only part of Uber's competition. Isn't it also competing against the viability of its own business model, i.e being able to subsidize rides with VC money until a fleet of self-driving cars is a viable replacement for it's drivers?
  - huac 10y ago
    Imagine you're an investor in the last round who invested at $7.5 billion. Now, Uber buys Lyft for $7.6 billion. Are you happy with that return? Any sale, just by necessity really, would have to be for a significant premium.
aetherson 10y ago
The last thing that Uber needs is to basically say to their investors, "We have no ability to outcompete a much smaller competitor, we just have to buy them out." I also think that people overestimate the effect that Lyft per se has on Uber's prices/margins. Uber competes not just with Lyft, but with other, smaller "use an app to get a ride" apps, and with taxis, public transit, using your own car, and not going to where you're going. Even if Lyft rolled up its operations tomorrow, I don't think you'd see more than a marginal effect on Uber's unit-profit/volume tradeoffs.
ehsankia 10y ago
That would be the silliest decision for Lyft, as it is so close to taking over Uber. With the Google case hanging over them and all the bad press they've been getting lately, Lyft is catching up faster than ever. Why would they sell out now when they could potentially pass and take over Uber?
- M_Grey 10y ago
  ...Not to mention that a ton of staff would probably bail before working in the Uber "family".
flamedoge 10y ago
And then consumers lose because uber has pricing control.

valuearb 10y ago

This would be the greatest news app very for dozens of competitors. 2 years later one is another Lyft, and Uber blew another $10B.

shoyer 10y ago

I imagine there might be serious anti-trust concerns with such an acquisition.

jacquesm 10y ago
Why? Neither of those companies has anything even close to a monopoly.
- Retric 10y ago
  Combined they likely have a lot of local monopolies even if they don't have a national or global one.
  - jacquesm 10y ago
    You mean places where there are no other taxi services, but where Uber and Lyft both have drivers?
  - rahkiin 10y ago
    It seems to me that neither the FCC nor the FTC consider 'local monopolies' as actual monopolies. See: ISPs.
    - adventured 10y ago
      Local monopolies are definitely not uncommon in the US. On a sheer numbers basis, it's very rare for small local monopolies to be pursued on anti-trust grounds, however the majority of US anti-trust cases are made up cases that don't resemble the Microsoft / AT&T / IBM type scenarios. They will occasionally go after small local monopolies, the abuse has to be so great it gets their attention however. You can browse all anti-trust cases here: https://www.justice.gov/atr/antitrust-case-filings?page=1 https://www.justice.gov/atr/antitrust-case-filings?page=1 Here's a typical example, that is a million miles away from something like the Microsoft case: https://www.justice.gov/atr/case/us-v-michael-p-barbour https://www.justice.gov/atr/case/us-v-michael-p-barbour
- cortesoft 10y ago
  You don't have to be a monopoly to be in violation of anti-trust laws. The Clayton Act says that they can block any merger or acquisition that would 'substantially lessen competition'. Even though they wouldn't be a monopoly, it wouldn't be hard to argue that merging Uber and Lyft would substantially lessen competition. https://en.wikipedia.org/wiki/Clayton_Antitrust_Act https://en.wikipedia.org/wiki/Clayton_Antitrust_Act
  - jacquesm 10y ago
    Good point, that's something that might happen, especially because both are fairly open about using the money raised from investors to subsidize the rides. Size-wise, especially in some locations Uber and Lyft now dwarf the regular taxi services. So you're probably right that this would at least be reviewed and likely flagged down, assuming that such local issues would be enough to raise that flag.

geofft 10y ago

Would that not violate antitrust law? At this point, Uber and Lyft have basically created a market and become the two biggest players in it, and if the "race to zero" as you put it disappears, it's literally prices no longer being competitive and consumers paying higher prices.

tyingq 10y ago

I wonder if the overlap of drivers that do both Lyft and Uber would somehow make Lyft worth less to Uber than it would be worth to a different buyer. I'd heard, anecdotally, that many (most?) Lyft drivers also drive for Uber.

jonwachob91 10y ago
The value for Uber acquiring Lyft is in eliminating it's only real competition, which is worth more than any number of drivers and users. That's also why they'd have to pay a large premium over the current $7.5B valuation, such as the $10B suggested by parent. I'm unaware of any transportation companies that could really afford to purchase Lyft.
- tyingq 10y ago
  Didi might be a contender.
  - dmbass 10y ago
    Didi already has a non-compete pact with Uber (they acquired Uber's Chinese arm from Uber).
    - exhaze 10y ago
      No - this only applies to Uber not operating in China. Didi can still compete with Uber in any other country.
- bogomipz 10y ago
  Isn't Lyft only part of Uber's competition. Isn't it also competing against the viability of its own business model, i.e being able to subsidize rides with VC money until a fleet of self-driving cars is a viable replacement for it's drivers?
- huac 10y ago
  Imagine you're an investor in the last round who invested at $7.5 billion. Now, Uber buys Lyft for $7.6 billion. Are you happy with that return? Any sale, just by necessity really, would have to be for a significant premium.

aetherson 10y ago

The last thing that Uber needs is to basically say to their investors, "We have no ability to outcompete a much smaller competitor, we just have to buy them out." I also think that people overestimate the effect that Lyft per se has on Uber's prices/margins. Uber competes not just with Lyft, but with other, smaller "use an app to get a ride" apps, and with taxis, public transit, using your own car, and not going to where you're going. Even if Lyft rolled up its operations tomorrow, I don't think you'd see more than a marginal effect on Uber's unit-profit/volume tradeoffs.

ehsankia 10y ago

That would be the silliest decision for Lyft, as it is so close to taking over Uber. With the Google case hanging over them and all the bad press they've been getting lately, Lyft is catching up faster than ever. Why would they sell out now when they could potentially pass and take over Uber?

M_Grey 10y ago
...Not to mention that a ton of staff would probably bail before working in the Uber "family".

flamedoge 10y ago

And then consumers lose because uber has pricing control.