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Google Looking to Enter the Ride-Sharing Business

Posted March 03, 2015 11:41 AM by Jordan Perch
Pathfinder Tags: cars google Ride-Sharing Business

In 2013, Google Ventures, Google's venture arm, invested $258 million in Uber, which was one of the biggest investments it has ever made. It also made Google one of Uber's biggest investors, in a deal that immediately sparked speculations as to what this move could mean for both companies. The prevailing opinion was that Google was looking to get into the ride-sharing industry, and buying a large chunk of Uber, the world's leading ride-hailing service, clearly suggested that Google wanted to get a piece of the action of this potentially highly lucrative market.

Now, a couple of years later, it seems that everyone who thought that Google is interested in the ride-sharing business were right, but as it turns out, it wants to do it alone, rather than with Uber. According to a report from Bloomberg, Google is working on a ride-hailing app on its own, a move that the tech company has already informed Uber about. The report says that David Drummond, Google's Senior Vice President of Corporate Development and Chief Legal Officer, who has been on Uber's board since his company bought a stake in it, has shown screenshots of the app to some Uber executives, after which, Uber started considering asking Drummond to resign from the board.

Google will probably try to connect the efforts for launching a ride-hailing app and developing a commercially available driverless car, and start offering ride-sharing services using autonomous vehicles, which would bring the industry to a whole new level.

If these reports are true, it means that Google is set to become Uber's competitor, instead of trying to further strengthen Uber's position in the market. This could have a serious impact on Uber's business, with potentially huge losses in revenue and market share. Google is a far superior company to Uber in almost every aspect, starting from its financial power, all the way to the expertise in software development, which plays a key role in Uber's business model.

Although Uber has seen a stellar growth in the past couple of years, being valued at $40 billion recently, and employing thousands of new drivers each month, it doesn't come anywhere near what Google is worth, which is somewhere around $400 billion. Another important fact is that Uber's smartphone app that connects drivers and riders is based on Google's Maps services, so if Google decides to launch its own ride-hailing app, Uber will probably have to look for another mapping application. This would certainly undermine Uber's supremacy in the ride-sharing market, given that all other mapping applications are not nearly as good as Google's and could pose a threat to efficiency of services offered by Uber.

Also, the fact that Google's autonomous vehicle program is at a pretty advanced stage gives the search giant another advantage over Uber in a future ride-sharing market, which will highly likely be dominated by cars that can drive themselves, rendering Uber's current business model that employs drivers in addition to a smartphone app, obsolete.

Be that as it may, it seems that Uber and other ride-sharing services should brace themselves for some serious competition and get ready to face a disruption that could be similar to what has been happening in the taxi industry.


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