The app-based cab aggregation industry is growing really fast, becoming highly competitive, with many challenges for the players. Despite, the market has been attracting new players at regular intervals, and the new entrant is Google. Amidst the competition and challenges, Google is all set to launch its ride-sharing service through the Waze app. Waze, which Google acquired in 2013 for $1.3 billion, is a real-time navigation app developed by an Israeli startup to help drivers learn about the traffic and road conditions on the go with the help of user comments and updates. According to the latest available report, Waze has more than 50 million monthly active users. With the intelligence and technology available related to the business, the service can be made better than the existing players in the market. Since it is a real-time navigator, the experience can be made flawless, unlike Uber and Lyft.
Yet again, Google’s aim is to make a change by solving common problems. The service is going to be very helpful and convenient as it will connect the riders with the drivers who are already heading towards the same direction. As reported by WSJ, the wage is a maximum of 54 cents a mile and a driver can perform only two rides per day to ensure that the drivers don’t make it a taxi business. Currently, Google is running a Pilot program which started in May for 25,000 area workers at firms like Google, Walmart Stores Inc., Adobe Systems Inc. Though Google is not taking any fee as of now, according to the report by Forbes Google will take a 15% cut of the transaction. This could be one of the reasons why Uber is building its own map investing $500 million.
Google’s Next Move?
The strategies indicate that Google is planning to enter the transportation industry with a slow and steady pace. This will give a tough competition to the existing players in the market. Google is planning to expand the service by the end of September. It will permit anyone in San Francisco to become a driver or rider by using the Waze app.
With Google having humongous intelligence, it might be very easy for the Giant to proceed with the idea. However, it will have to face several potential issues related to legality and safety. It won’t be a cakewalk for Google, considering Uber’s 7 years of experience in the industry and a valuation of $68 billion. Since it is not giving the service a cab aggregation’s shape, the drivers or the riders won’t be tagged as employees of Waze. It is planning to remove problematic drivers based on user review which is not a very reliable way of doing it.
“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”, says Mr. Schachter.
Google Vs. Uber
The competition between Google and Uber is taking intense shape, making Alphabet executive David Drummond resign from Uber’s board. Uber had once received $258 million from Google Ventures as an investment and now both the companies are working on developing driverless cars. Google founded the project in 2009, now covering over 1.8 million miles of autonomous driving with its test cars. Uber recently acquired Ottomotto, which is a six-month-old driver-less truck startup founded by Google veterans. Uber claims that it will beat Google by commercially testing the autonomous taxis in Pittsburgh in a few weeks.
People with an insight in the matter say that Google might test its autonomous car in a ride-sharing service as it could be a potential business model. Google started testing the ride-sharing service in Israel last year. Now, the service is available in almost every part of Israel. It might have a great potential to turn the transportation industry in other countries too.
Uber and Google are now becoming rivals in many areas. The later one is giving a crystal clear indication of entering into the transportation industry, however, It has not yet tagged the service as cab aggregation business. The company being a resourceful giant, via Waze, will highly increase the challenges and competition in the market.
Google is apparently leveraging on its cash reserve, the services are more convenient, as well as cheaper. Therefore, Uber will face a very tough competition in future.
The question that arises is how will Uber tackle the challenge?