How the taxi app battle works – and what it is worth

10pm BST Taxi and car-sharing companies have shared revenues each month with tax authorities for a year, while Uber and Lyft have kept the figures secret. This week, Lyft reported its first profitable quarter,…

How the taxi app battle works – and what it is worth

10pm BST

Taxi and car-sharing companies have shared revenues each month with tax authorities for a year, while Uber and Lyft have kept the figures secret.

This week, Lyft reported its first profitable quarter, with revenue up 18% to $1.25bn and a net profit of $85m. Uber also reported revenues up 16% to $2.35bn with a profit of $61m. Neither publicly disclosed earnings.

Lyft’s turnaround after a very public drop off as competitors started competing for market share is the subject of much industry speculation.

The dueling quarterly reports come at a time when its main competitor Uber is trying to sign-up cars for its fast-growing surge-pricing “surge” service. Riders will be charged more if their ride has more passengers – a practice that regulators and the public may not support when they cannot know the exact number of users driving for Uber. The company’s stock price plunged to all-time lows earlier this year, in part due to concerns about the company’s accounting methods and transparency.

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During Uber’s highly criticized one-off trials of surge pricing, Uber drivers made more than £600,000 thanks to profits during the high-demand days. A spokeswoman for Uber did not respond to Reuters’ request for the number of drivers making more than £600,000.

Uber has been more transparent about its use of independent contractors, though some charges for drivers have not yet been established. If independent contractors cannot make a reasonable living, they will have no incentive to drive, people in the industry say.

Taxi aggregators face fierce competition for any customer concerned about their safety. New York taxi commissioner Meera Joshi said in July: “I think there is still room for us to do things that will create a different experience that is not based on price.”

But independent analysts say the taxi industry still appears to have the edge: “It would seem unfair for Lyft to profit from this.” The drivers of an Uber ride cost more than the fares paid by a Lyft ride, Jeffrey McCormick, chief technology officer at TAXI Taxi.

The dashboard displays shows any surge price. Photograph: Tom Phillips for the Guardian

“If you hire a licensed cab driver and you have to pay them their base fare, their tips, what else do you pay them? Uber is essentially working an extra economic gig on top of that. The question is, does it make a lot of economic sense for a U.S. driver to work for a tax-sheltered company and make Uber a very substantial part of their income? I don’t think it does.”

Uber and Lyft push popular ride-sharing features

Uber’s and Lyft’s apps generate cash for the companies, but they also include lots of popular features, analysts say.

The companies have been steadily adding features that would have previously been offered by the taxi marketplaces.

Lyft recently launched a feature similar to Uber’s. Now when a user connects with a Lyft driver through its app, the next time the user rides a Lyft in the same direction, they will automatically be paired with another driver, and a car will be on the way. The reverse is also possible.

The latest change is the addition of online bookings, where drivers can schedule trips, much as they would with most restaurants. These online bookings can be made using the Uber app as well, though some taxi apps do not support this.

This week, Lyft also introduced a feature that gives passengers a readout of car ownership costs in the surrounding area so they can see if it would be cheaper to take a different type of car service.

“There are all these ways to get in the car and not see what they are driving for”, McCormick said.

“They are putting so much intelligence in the Uber app that it is surprising they don’t have the same sensors in the Lyft app”.

Taxi app features drive costs down for consumers, cheaper for drivers, McCormick says.

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