Alphabet leads $1bn investment in Uber rival Lyft

Marcus Newton
October 21, 2017

USA ridesharing giant Lyft Inc on Thursday announced it has received a US$1 billion investment led by the venture arm of Google parent Alphabet Inc to help ramp up its challenge to market leader Uber Technologies Inc.

The round was led by CapitalG, the growth investment fund of Alphabet that has also backed large private tech companies such as home-renting platform Airbnb and payments firm Stripe.

Alphabet's Lyft investment shows that the biggest companies in the self-driving space are happy to spread their money and attention out for multiple projects that are ostensibly working toward the same goal.

But while the stake in Uber is worth a lot more than the stake in Lyft, the two companies have an increasingly frosty relationship, based largely on a fractious court case concerning stolen self-driving vehicle technology.

Lyft has gained market share in the U.S. this year as Uber suffered from executive turnover and self-inflicted wounds, including a protest over the company's ties to the Trump administration.

"Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth", Lawee said in a statement.

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Lyft is deepening ties to Alphabet despite its partnership with General Motors, which has invested $500 million. Not to forget that Alphabet also owns Waymo. GV invested in Uber in 2013, but then Uber began to develop autonomous cars and compete directly with Alphabet.

Alphabet subsidiary Waymo, one of the leaders in autonomous vehicle technology, sued Uber in February this year, alleging that a former Waymo employee, Anthony Levandowski, had taken trade secrets with him when he quit the firm to start his own self-driving truck company that was subsequently bought by Uber.

"It is another punch by Alphabet at Uber", said Erik Gordon, an entrepreneurship expert at the University of Michigan's Ross School of Business. 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. The ride-hailing rival to Uber also wrote that with the money coming in, this would put its valuation to $11 billion.

The development is bad news for Uber, which is trying to finalise a major investment from SoftBank Group Corp.

"This thing likely goes up from here", Maris said. Lyft's losses stood at $600m, but later the company stated that it would become profitable by 2018.

Other reports by MaliBehiribAe

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