Gina Chon –
Google is steering Uber and Lyft from the back seat. The search giant’s parent Alphabet has made money on the two ride-hailing apps in a number of ways, according to details disclosed in their initial public offering documents.
It will keep doing so even as its own technologies threaten their existence.
Alphabet has direct investments in both Lyft, which listed its shares in March, and Uber, which has filed to do so soon. Both could pay off handsomely. In 2013, the company founded by Larry Page paid $258 million for a 5.2 per cent stake in Uber, which would be worth 20 times that if the company goes public at a $100 billion valuation.
A later-stage investment of $500 million in Lyft is less lucrative. It’s now worth about $722 million. Added together, the two investments could be worth eight times what Alphabet paid for them.
Google itself benefits too. Uber forked out $58 million from 2016 to 2018 for Google Maps, in addition to $702 million for advertising and other services.
Lyft spent $208 million over the same time for similar things. The fight for riders means Uber and Lyft’s chief executives, Dara Khosrowshahi and Logan Green, will continue to fill Google’s tank with ad spending.
The plot thickens with Waymo, Alphabet’s self-driving car division. That’s a threat to both Uber and Lyft, who count drivers as one of their biggest costs. Waymo plans to test a commercial self-driving car service in the Phoenix area and has a permit to try out autonomous vehicles on public roads in California.
Yet Waymo also owns around 0.3 per cent of Uber in convertible shares, which it took to settle a dispute over intellectual property. As a result of that case, Uber is still being reviewed by an independent expert who could call for changes to Uber’s product or suggest it pay licensing fees to Waymo.
Alphabet no longer has a board seat at Uber because of competition with Waymo — though it did until 2016. And Lyft’s board still includes David Lawee, a partner at Alphabet’s CapitalG investment arm.
The upshot: The $848 billion company is at once a supplier, an investor and a rival to the two ride-hailing apps.
Whichever wins the fight for investors’ favour, Alphabet is the one that holds the keys. — Reuters