Increasingly Desperate Lyft Accuses Rival Uber of Dirty Business Tactics

Moneybox
A blog about business and economics.
Aug. 12 2014 2:15 PM

Increasingly Desperate Lyft Accuses Rival Uber of Dirty Business Tactics

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A protest against Uber in Europe. The ride-sharing wars are on.

Photo by David Ramos/Getty Images

In the fight for ride-sharing dominance, Lyft has started throwing punches. After attempting to stay above the fray for months, the pink-mustachioed car service ditched its upbeat attitude and accused rival Uber of deliberately sabotaging its operations by repeatedly ordering and canceling Lyft rides.

Lyft claims that 177 Uber employees have booked and canceled 5,560 rides since Oct. 3, 2013. Instead of bait and switch, call it book and ditch. CNN Money reports that Lyft identified this tactic by crossreferencing the phone numbers of "known Uber recruiters" with numbers attached to accounts that canceled rides.

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This is not the first time that Uber has been accused of shady business tactics. In January, taxi-hailing app Gett said that dozens of Uber employees had employed the same book-and-ditch strategy to tie up its platform. Gett claimed the subversion came from at least 13 Uber employees and went as high up as New York general manager Josh Mohrer. For both Gett and Lyft, Uber's approach did damage on multiple fronts: delaying service, frustrating drivers, and likely sending some customers who saw increased wait times over to Uber.

What's interesting in Lyft's case is not just that it is being targeted by Uber but also that it has chosen to make that publicly known. Lyft has been shopping around the story of Uber's book-and-ditch attacks to journalists (including two at Slate) for several months but until recently had opted to keep the information off the record. "It’s something that’s happening and taking place," says Erin Simpson, a spokeswoman for Lyft. "Frankly, it's not a good use of my time to be talking about the things that Uber is doing."

Simpson says the company's calculus changed after learning that drivers who worked both for Lyft and for Uber were being bullied for doing so. Multiple drivers said Uber told them (falsely) that working for both companies violated New York City's Taxi and Limousine Commission regulations and threatened to report them. "We were told by drivers that Uber representatives had called them and said 'We know you're driving with Lyft,' " Simpson adds. Uber issued a statement denying the allegations as "patently false."

While Uber may very well be engaging in dirty business ploys, Lyft's decision to lash out at its competitor suggests a growing frustration, and perhaps desperation, at the company. Just last week, Uber stole Lyft's thunder when it pre-empted a carpooling announcement Lyft had spent months on—and touted as its biggest contribution yet to the future of transportation—with its own release of a virtually identical service. In terms of size and scope of the two companies, there's no comparison. Uber has raised $1.6 billion for a massive $18.2 billion valuation, Lyft a mere $333 million that values it at $700 million. Uber is in 92 cities in the U.S. and 70 outside of it; Lyft operates in 67 U.S. cities and has no international presence.

So far being the nice guy hasn't worked for Lyft. Now it might be changing its tune.

Update, August 12, 5:08 p.m.: Uber continues to deny Lyft's accusations and is offering an explanation for the hostility—Lyft is upset that Uber hasn't acquired it. "These attacks are unfortunate but somewhat expected," Uber said in a statement. "A number of Lyft investors have recently been pushing Uber to acquire Lyft. One of their largest shareholders recently warned that Lyft would "go nuclear" if we do not acquire them. We can only assume that the recent Lyft attacks are part of that strategy."

Lyft, for its part, dismissed Uber's claims: "Once again Uber is deceiving the public, now with false allegations and an attempt to deflect from their illegal cancel campaign."

Alison Griswold is a Slate staff writer covering business and economics.