Amazon.com, Inc. (NASDAQ:AMZN) was one of several firms to turn down Lyft, the mobile ride-sharing app. Lyft had reportedly met with the online retail juggernaut, as well as a handful of other brands, to sell itself. Unfortunately for Lyft, Amazon was not interested in their offer. Can anyone blame Amazon, especially considering the legal woes that come with this kind of technology?
Amazon.com, Inc. Doesn’t Need a Lyft
We have all seen the mounting pressures on a tech firm like Uber. The multi-billion-dollar ride-hailing app has gone through legal troubles, threats from the taxi industry and even battles from its own drivers. It seems apparent that Lyft wants to avoid those same types of conflicts in the future.
It is being reported by the New York Times that Lyft has initiated talks in regards to selling the company. That’s right. Lyft is trying to start the sale of its own company to other firms.
The ride-hailing app began acquisition discussions with Amazon, Alphabet Inc (NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL) and General Motors Company (NYSE:GM). Lyft has even tried to sell itself to Uber.
Reportedly, these talks have been going on for several months. Despite the lengthy sale talks, Lyft has been unsuccessful in selling itself. Though, the best remaining candidate seems to be the automaker.
Analysts say that it has actually been public knowledge about Lyft’s intentions. The idea that Lyft wanted someone else to buy it became known in June. It was reported that Lyft hired Qatalyst Partners LP, a boutique investment bank that assists tech firms seek out a buyer.
Lyft does have plenty of cash in its reserves – $1.4 billion in the bank – and leadership has plans to expand. Its main problem is that it isn’t profitable. Lyft also concedes that the ride-hailing sector is generating a lot of heat from all over the place. Despite being popular with consumers, public officials, unions and taxi drivers aren’t happy and want their share of the pie.
But just because Lyft can’t sell itself, it doesn’t mean the company will stop operations. It was reported that Lyft has ramped up its marketing budget to increase its market share. In fact, according to reports last year, Lyft had spent more than 60 percent of its revenues on marketing. This makes sense since when most people think of ride-hailing apps they immediately think of Uber.
Amazon has other plans right now. A ride-hailing app just isn’t one of them right now.
Amazon.com, Inc.’s Indirect Relationships With Lyft, Ride-Hailing
Believe it or not, Amazon actually does have a relationship with Lyft. Though, it is rather indirect.
In 2012, two Lyft engineers developed the ride-hailing app and hosted it on virtual machines in the cloud using Amazon Web Services (AWS). In May of that year, Lyft processed its very first ride on the AWS cloud.
Lyft processes about 14 million rides every single month. Despite its growth, Lyft still maintains its infrastructure operations on Amazon’s cloud network. Many tech enthusiasts describe Lyft as a tech startup that was born in the cloud and continues to stay in the Amazon cloud.
According to Lyft CTO Chris Lambert, the only difference today is that “we’re taking advantage of many more Amazon technologies.”
Although Amazon is shying away from the ride-hailing business, it is taking on a similar model. It was reported earlier this year that Amazon would be hiring “on-demand drivers” for its deliveries. As part of efforts to cut down on shipping costs, boost delivery times and increase profit margins, the website is turning to affordable, average everyday drivers to handle its standard packages.