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Alphabet Inc (GOOGL) Takes Aim Uber with Wave Rider

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Alphabet Inc , mother to Google and a host of other cool tech companies might be making subtle moves to get a foothold in the ride-sharing business. Uber and rival Lyft are on the front lines of the ride sharing business in which people take rides in private cars for ease and comfort that public taxis don’t provide. Alphabet bought a stake in Uber during its last round of financing; hence, it is surprising that tech giant is helping launch a rival product.

Alphabet Inc (GOOGL) Uber Ride Sharing

Alphabet wants to swallow Uber

On Monday, Google’s parent firm unveiled the pilot program of its ride-sharing app with a pilot program for folks in the San Francisco area. The new program will see several thousand workers pooling a ride to and from work using the Waze navigation app.

The selling point of Google’s car-pooling app is that it offers a cheaper alternative to Uber for both drivers and riders. To start with, a ride using the Maze app costs $0.54 per mile but Uber on the other hand calculates its fare using four criteria.  Uber charges a base fare (a flat fee at the start of the ride), a Cost per minute (an amount you pay for each minute you spend in the car, Cost per mile (for each mile you cover) and a Booking fee that cover’s operational costs. In San Francisco the fare of the low-cost UberX $2.20 plus $0.26 per minute plus $1.30 per mile.

More so, drivers might earn lesser on Uber than on Maze because Uber deducts a $1 Rider Fee in addition to 20% of the fare. However, drivers won’t be paying Alphabet a commission – at least, for the duration of the pilot program – hence, drivers might have a better incentive to do business with Google than with Uber.

Google’s car-pooling app, Waze Rider made its debut in Israel last year and the firm says thousands of users are already using the app across Israel. Google brought the app into the U.S. in the fall with beta testing among its workers. Now a pilot program is underway in San Francisco but the firm says it doesn’t have long-term plans for competing with Uber. The firm says the pilot program is only to gauge users’ interest – but what’s stopping Google from jumping it with both feet if users show serious interest.

The big money is on ride-sharing apps

Yesterday, I wrote about how Apple Inc. has invested $1B in a Chinese ride-sharing startup called Didi Chuxing. The fact that Alphabet is also entering the ride-sharing business today lends credence to the thesis that tech companies seem to consider transportation as the next frontier to be conquered. The Waze Rider that Google launched looks to be a thinly-veiled attempt to go up against Uber who holds the largest share in the U.S. ride-sharing market.

However, Google is not necessarily out to kill Uber, the firm is only making a smart business decision. To start with, Uber threw the first punch by crossing into Google’s field of vision when it revealed that wanted  to interest build a mapping system and self-driving cars. What’s sauce for the goose is sauce for the gander – if Uber can cross Google, there’s no big deal if Google plays the hand it was dealt.

 

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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