Uber and Lyft have been engaging in head-to-head competition in San Francisco. As both companies continue to grow in popularity, the question, “are you an Uber or a Lyft type of person?” permeates our everyday lives. In order to continue to grow and dominate the market, both companies have been trying to poach each other’s drivers. However, many are characterizing this behavior as a “race to the bottom.”
Interestingly, Uber’s new driver center is across the street from the Lyft lot in San Francisco. As Uber drivers come to the center to get set-up with the service, Lyft entices them over to the other side of the road with free luncheons, and vice-versa. Neither company can demand exclusivity from the drivers, so to incentivize drivers to be loyal, both companies offer perks and bonuses. At first glance, these offers may be enticing to new drivers. However, upon closer analysis, both companies’ practices are hurting drivers while the promotions offered are unsustainable.
For example, if an Uber driver will give 10 Lyft rides, Lyft offers a $500 “bonus.” Similarly, if a Lyft driver will drive for Uber, the driver gets $500 and a guarantee to net $45 an hour until the end of June. In addition, each company is promising drivers a greater customer base, and with that, greater opportunities to make money. However, increasing the customer base comes at a price. Both Uber and Lyft have dropped their fares by 20%, which is great for consumers and bad for drivers. Both companies also try to attract drivers with promises of a good yearly salary. According to Uber, full-time drivers can make $90,000/year in New York City and $74,000/year in San Francisco. Actual drivers, however, do not find it to be as easy as it sounds. In addition, 20% to 30% of a driver’s income goes to taxes, gas, and car maintenance.
It remains to be seen how the competition will fare out, though it is clear that the battle to the top is getting fierce.