Summary: Why Uber Ridehailing Will Still Dominate the Industry

uber ridehailing

If you’ve recently heard about Uber’s CEO Travis Kalanick taking leave, you might be wondering what the future of this innovative ridehailing company has in store. We reviewed a recent article from CityLab, and we’ve summarized our findings here. The consensus? Unless city regulations change, the Uber will remain on top.

Uber ridehailing: CEO Takes Leave of Absence

With the results of a wide-ranging investigation into sexual harassment, discrimination, and alleged criminal activity among Uber employees, founder and CEO Travis Kalanick will take a long-term leave of absence from the ridehailing company.

While this has caused uncertainty, one thing remains: Uber and its number-two competitor Lyft remain at the top of the ridehailing industry. And, just so long as city regulatory conditions remain favourable, they are likely to stay there for some time.

how Uber dominated in Austin, Texas

Both Uber and Lyft ridehailing services pulled out of Austin, Texas in May of 2016 after local regulations changed to require driver fingerprinting. At this time, other competitors such as Fasten, Fare, and Ride Austin took over, relying on similar software with slight variances on business models. 
However, one year later the Texas Governor decided to revoke these regulations that initially pushed Uber and Lyft out of the city, signing off on legistlation enacting state-wide free-enterprise-friendly rules for ride-hailing companies. Uber and Lyft promptly returned, dominating the city again nearly instantly. 

“In just one week — Fare, the #3 player in the market, closed up shop in Austin. Fasten dropped their rates within 3 days and quickly expanded their discount program to attempt to keep the most price sensitive riders. And at RideAustin — we saw our volumes drop by 55% in 1 week[.] The market power of the giants is undoubtedly significant as they’ve gained at least 20K rides from us alone,” says Andy Tryba, the co-founder CEO of Ride Austin.

Why Regulations Matter more than popularity

Regulations will matter far more than consumer ratings or public opinion in deciding the fate of ridehailing services like Uber, who rely on regulatory conditions to remain favorable in order for them to operate and flourish.

Regulations determine the viability of ridehailing services, which can make or break the success of such programs. For example:

  • Most cities have jurisdiction over most street space and they’re beginning to understand what tools are available to shape access to that precious commodity; as congestion worsens and new technologies flood in
  • Certain rights of way may be reserved for high-occupancy vehicles only, as New York City has done to smooth peak commutes on its bridges.
  • Curbside controls may limit where Ubers or Lyfts can pull up to hot destinations, as dozens of airports have set up to keep bumper-to-bumper madness at bay.
  • Cities could move to require ridehailing vehicles to meet certain tailpipe standards, as Portland does.
  • Officials can crack down on data-sharing mandates, as San Francisco is to better understand ridehailing traffic impacts.
  • Or, as London, Stockholm, and Singapore have done to great success, cities could price their roads to manage congestion and encourage carpooling and transit.
It is impossible to say whether Uber and Lyft will be the ones to withstand these kinds of policy changes. But’s safe to say that these kinds of regulations would by definition be local, and in that sense, delight smaller competitors. Uber’s reign has not ended yet, and strong-willed cities may have the power to keep it alive.

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