From Bloomberg Business:
The furious land grab by Uber and its ride-sharing competitors has, from the very beginning, been something of a street fight—sometimes literally.
In the latest salvo, Uber Technologies Inc., the top global player, sued Indian rival Ola claiming it set up fake rider accounts to flood Uber’s system with more than 400,000 ride requests that were ultimately canceled. Jugnoo, a booking service for auto-rickshaws in India, has similarly said Ola employees were disrupting its service. Ola, which has raised more than $1 billion from investors such as Tiger Global Management and Sequoia Capital, has denied the accusations and agreed, as part of a court order, to avoid making fake rider accounts.
That suit is just one of many examples of somewhat questionable business practices involving companies in the still-nascent but hyper-competitive ride-hailing industry. “It’s a brass-knuckles business,” said Evan Rawley, a business professor at Columbia University.
This time, Uber is positioning itself as a victim. In the past, it’s been cast as a bully. In 2014, Uber employees requested and canceled rides through Lyft Inc.’s app. Uber and Lyft subsequently banned the practice. Sound familiar? “Pot meet kettle,” Anand Sanwal, the head of a research firm CB Insights, wrote in his newsletter.
Like the taxicab industry before it, the ride-hailing business can lend itself to guerrilla tactics. “The sharing economy isn’t in the relatively rarefied air of digital interaction. It’s a combination: It’s transportation. It’s real estate. These are industries in the trenches,” he said. “You put all these together, and the street fighting isn’t hugely surprising,” said Arun Sundararajan, a professor at New York University’s business school.
Here’s a roundup of some of the other nasty competitive tactics deployed in this industry, which is barely five years old:
Size Is Relative in China
Uber and Didi Kuaidi have blasted out contradictory reports about the performance of their businesses and their competitor in China. Uber Chief Executive Officer Travis Kalanick told the Financial Times in January that Didi Kuaidi was spending $70 million to $80 million to subsidize rides in China, amounting to $4 billion a year. Didi denied those numbers and has said it is profitable in more than 100 cities. The two have also offered very different versions of their market share.
Blocked on WeChat
Uber has had trouble using the most popular messaging application in China after Tencent quietly blocked Uber from using the platform. It just so happens that Tencent is a major investor in Uber’s biggest Chinese competitor, Didi Kuaidi.
Trade Secrets Lawsuit
Uber hired Travis VanderZanden, Lyft’s former chief operating officer, in 2014. In alawsuit, Lyft claimed that VanderZanden took with him documents containing company secrets downloaded to his Dropbox account. VanderZanden responded with a claim that Lyft invaded his privacy by looking at his personal Dropbox account.
Uber employees started an initiative called SLOG that involved contractors requesting Lyft rides, recruiting drivers and canceling rides, according to a Verge report in 2014. The goal was to thwart its biggest U.S. competitor.
Read more from Bloomberg Business…