“Less than 0.5 percent of miles traveled in the U.S. happen on ride-share networks,” John Zimmer, president of Lyft, said in a statement announcing the deal. “This creates a huge opportunity to best serve our cities’ economic, environmental, and social futures.”
Alphabet’s investment ratchets up the high-stakes battle for supremacy in the ride-hailing industry.
Uber, which is valued at nearly $70 billion and is the industry’s dominant force, has been grappling with scandals over its corporate culture and business practices. A group of investors forced out Travis Kalanick, Uber’s co-founder and former chief executive, earlier this year over concerns that he was not fit to lead the company. Uber has appointed a new chief, Dara Khosrowshahi, and is now trying to learn from its missteps while pursuing his goal of taking the company public in the next 18 to 36 months. It is nearing a deal to sell a significant stake of itself to SoftBank, a Japanese conglomerate, which would include about $1 billion in new capital.
Lyft has benefited from Uber’s series of high-profile stumbles in recent months to lift its own profile. The two companies are locked in something of a race for which can go public first; whichever company does will most likely set a benchmark for Wall Street for the valuation of a public ride-hailing company.
Investors trying to position themselves for the best returns have put money into competing entities, creating murky allegiances.
SoftBank, for example, is also a major investor in Didi, a ride-hailing company that was once a major competitor to Uber in China and is itself an investor in Lyft. And CapitalG is a sister company to GV, formerly known as Google Ventures, which is a major investor in Uber.
Those relationships are further complicated by how Uber is dealing with a lawsuit filed by Waymo, the self-driving car unit owned by Alphabet. Waymo has accused Uber of stealing trade secrets after it hired a former Google employee.
Lyft must also balance a delicate relationship between itself and a group of technology partners who are working with it on self-driving technology. In July, Lyft unveiled a large Silicon Valley headquarters for its Open Platform Initiative, a coalition of automakers and technology start-ups that are working together on software for autonomous vehicles. That group includes General Motors, Ford and Nutonomy, as well as Waymo.
“Ride-sharing is still in its early days,” Mr. Lawee, a partner at CapitalG, said in a statement. “We look forward to seeing Lyft continue its impressive growth.”