Google is moving onto Uber Technologies Inc.'s turf with a
ride-sharing service to help San Francisco commuters join carpools,
a person familiar with the matter said, jumping into a booming but
fiercely competitive market.
Google, a unit of Alphabet Inc., began a pilot program around
its California headquarters in May that enables several thousand
area workers at specific firms to use the Waze app to connect with
fellow commuters. It plans to open the program to all San
Francisco-area Waze users this fall, the person said. Waze, which
Google acquired in 2013, offers real-time driving directions based
on information from other drivers.
Unlike Uber and its crosstown San Francisco rival Lyft Inc.,
which each largely operate as on-demand taxi businesses, Waze wants
to connect riders with drivers who are already headed in the same
direction. The company has said it aims to make fares low enough to
discourage drivers from operating as taxi drivers. Waze's current
pilot program charges riders at most 54 cents a mile—less than most
Uber and Lyft rides—and, for now, Google doesn't take a fee.
The company says it doesn't believe Waze drivers' income is
taxable because it considers payments through its service
effectively as money for gas.
Google's push into ride-sharing could portend a clash with Uber,
a seven-year-old private firm valued at roughly $68 billion that
largely invented the concept of summoning a car with a smartphone
app.
Google and Uber were once allies—Google invested $258 million in
Uber in 2013—but more recently have become rivals in some areas.
Alphabet executive David Drummond said on Monday that he resigned
from Uber's board because of rising competition between the pair.
Uber, which has long used Google's mapping software for its
ride-hailing service, recently began developing its own maps.
The two also are racing to develop driverless cars. Google has
led the way with such technology, founding a project in 2009 that
has now amassed more than 1.8 million miles of autonomous driving
with its test cars. Uber earlier this month bought Ottomotto LLC, a
six-month-old driverless-truck startup founded by Google veterans.
Uber said it plans to start testing robotic taxis in Pittsburgh
over the next several weeks, beating Google to a commercial test of
self-driving technology.
Uber and Lyft declined to comment.
Waze is one part of Google's larger ambitions to upend
transportation. Google is considering testing its driverless cars
in a ride-sharing service, people familiar with the matter said,
and executives have identified that as a potential business model
for its self-driving technology.
Waze's path in new markets could mimic its development in
Israel, where the company was founded, according to the person
familiar with the matter. Google started testing a Waze carpool
service there last year, and it quickly expanded. The service is
now available at all hours in most parts of Israel.
In the San Francisco pilot, any local Waze user can sign up as a
driver, but ridership is limited to roughly 25,000 San
Francisco-area employees of several large firms, including Google,
Wal-Mart Stores Inc. and Adobe Systems Inc. Riders are limited to
two rides a day—intended to ferry them to and from work.
In the planned expansion, anyone with the Waze app in the San
Francisco area could sign up to be a rider or driver, the person
said. Though Google currently doesn't collect a fee, the company is
exploring different rates in Israel and San Francisco, the person
familiar with the matter said.
Ben Schachter, an analyst at Macquarie Group Ltd., said a Waze
ride-sharing service is a natural next step for Google, which has
made clear its intentions to move into transportation. He warned
that the company would need to navigate several potential pitfalls,
including legal and safety questions.
"I don't think they've had any significant experience in a lot
of the issues that will surely arise around" starting a
ride-sharing business, Mr. Schachter said.
Like Uber and Lyft, Waze's drivers aren't employees of the
company, the person said. Unlike Uber, Google doesn't plan to vet
drivers for a Waze service, instead relying on user reviews to weed
out problem drivers, the person said.
Waze, which operates as its own unit within Google, boasts 65
million active users, many of whom alert other users to police or
traffic accidents—a hallmark of the app.
Robert Rickett, a 29-year-old nonprofit worker in Sacramento,
Calif., said he uses Waze for navigation daily, particularly while
driving for Lyft in the evenings. But he said he wouldn't abandon
Lyft for a Waze ride-hailing service, unless it offered him better
opportunities as a driver.
Still, he noted Waze's positive reputation among drivers is a
big advantage—though he admitted he didn't know Google owned the
service.
"They have a lot of people who trust Waze," he said while
driving two Lyft passengers across the Bay Bridge into Oakland,
Calif. "If they can capitalize on that, they could pull some market
share."
Greg Bensinger contributed to this article.
Write to Jack Nicas at jack.nicas@wsj.com
(END) Dow Jones Newswires
August 31, 2016 02:05 ET (06:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Alphabet (NASDAQ:GOOG)
Historical Stock Chart
From Sep 2023 to Sep 2024