Google’s parent company, Alphabet, is trying to expand into the ride-sharing market by pairing with the Waze app to let commuters carpool together. On Monday, Alphabet launched its pilot program to let thousands of individuals in the San Fran
cisco area hitch rides to or from work. One interesting aspect of this launch is how this affects Google’s relationship with Uber. Uber, the most valuable private venture backed company, was funded by Google back in 2013 for $250 million. While Google and Uber have been allies, recently the two companies have been butting heads as they both are in the research and development stages of driverless car technologies.
Alphabet began testing the app, Waze Rider, in Tel Aviv back in 2015. Now thousands of people use the app in Israel, where Alphabet takes a 15% commission on the rides. The pilot program in the United States will charge riders 54 cents per mile to hitch a ride with the app users. Alphabet does not plan to take any cut during the pilot program, instead, they plan to use the app to gauge interest and see if there is potential in the United States. This news comes a day after reports that Apple invested $1 billion of its free cash in the Chinese ride-sharing firm Didi Chuxing. Ride-sharing is a growing market right now and it will be interesting to see who comes out on top between Uber, GM with Lyft, Apple with Didi Chuxing, and Google with Waze Rider. Thoughts?
I’m a little confused about the amount a ride sharer gets paid relative to how much an uber driver would be paid. Is 54 cents per mile enough to incentives people to share rides? Also this article is extremely interesting because of a recent post regarding a possible increase in congestion because of everyone driving more. This seems like it could be a very reasonable and simple solution to increasing congestion in coming years. Thanks for posting this, way cool!
That is a great question and after some further research I can tell you that drivers would not receive comparable pay to Uber drivers. The differentiation between a service like Uber and Waze Rider is that Waze Rider is incentivized to be used within employees of a large office. So far, Waze Rider has paired with companies like Wal-Mart and Adobe Systems to provide this program and gauge whether or not employees would carpool with one another. Waze Rider is not intended to be a ride-sharing service where individuals can serve as employees and make a living. Instead, it is a service that stimulates carpooling among individuals working in similar areas. In terms of traffic on the road, with a service such as this, less cars would be on the road as individuals would drive to places together. If Alphabet continues with this app in the United States, it will be interesting to see how effectively it could reduce traffic in high congestion areas such as Los Angeles.
After thinking about this more it is clear that even if the amount a driver makes is only enough to cover the cost of gas this will still be a great program for low income workers specifically because they will be go to their job anyways so giving rides will give them nothing but benefit. I think this could also be successful for children getting rides to school and could possibly down the road eliminate the need for buses. Thoughts?
I like your thinking Sam. The one hitch that I see in this idea down the road is when Alphabet starts taking a percentage on each ride. While not always the case in large office, most employees know each other. Instead of going through the app, they could simply negotiate outside of the app to avoid paying a premium. While oil prices are low right now, if oil skyrockets in the next five years, there will be a growing desire to use Waze Rider. There is a lot of potential for this app and it will be interesting to see if they plan to go ahead with it across the United States.
Thanks for your response Graham-chop! Bringing up oil just made me think of another possible affect of increased ride sharing. If this app is able to pay for the cost of gas for users then there could be a large increase in the amount of SUVs and minivans bought in the near future. This would happen I think for two reasons: first, people would care less about how fuel efficient their cars are because the ride sharing app would essentially pay for their gas; second, they would probably want more room in their cars to accommodate the ride sharing that will be worked into the everyday routine of their lives. What do you think Graham?
That is a very interesting point. Do you believe that the 54 cents that drivers make per mile would incentivize them to fit more people in their cars? Personally, I think that this would not affect their consumer behavior. A mid-size or smaller car usually fits on average about 5 seats. An SUV can usually fit upwards of 7 seats, I do not think the additional revenue from two extra individuals would stimulate buying a bigger car. Especially, because it is not always the case that you would be able to fill your car to capacity. It is interesting how a pilot app like Waze Rider could potentially affect factors from traffic to fuel consumption even in its early stage and it will be fascinating to watch how it shapes the industry down the road, no pun intended.
Although I agree that you would not realistically be able to pack your car to capacity using this app, I think that a larger car does more than just fit more people. It fits more people comfortably (emphasis on comfortably). Increased leg room and space for each passenger including the driver would incentives the purchase of larger cars. I also believe that if the app is very widely accepted then picking up an extra couple of people on your trip to work could be very easy and if someone can make another 3 or 4 dollars every morning by going a couple minutes out of their way I think they will do that.
There is no disagreeing that a larger car fits more people comfortably. But I do not believe an individual who has been buying a smaller car his whole life while change his buying behavior and instead buy an SUV. While I have no research to support my next claim, I have noticed that whenever I hail an Uber, there is usually a surplus of regular Ubers and not as many SUVs. As you and I both know Uber SUVs can be expensive (for those of you who don’t know, Sam and I took an $110 SUV ride back to our hotel). There is clearly an incentive to driving an SUV as an Uber driver because you would be rewarded, but I have not noticed an increase in buying of larger cars arising from this. I think it is fair to compare Waze Rider and Uber and if this Uber has not affected this then Waze Rider probably won’t.
Graham, you brought up how Waze Rider has teamed up with companies such as Walmart to gauge how acceptive their employees are of the APP. Personally being from Alabama, I think this was a great strategic business choice by Alphabet, simply because where I’m from Wal-Marts are THE main place to shop for clothing and food products. Moreover, as a company that has a higher GDP than a plethora of countries within the world, they also have a lot of employees from the communities that they are located. However, the best question for me is that most Wal-marts are in more rural areas since they are the number source for all sorts of products. So, like Uber which has recently been introduced in Alabama’s biggest city of Birmingham, I find that their could be troubles for the Waze Rider to get their best estimate on customer acceptability. Personally, I think more rural areas would possible be more receptive for this transport to and from work, but that’s just a personally opinion because I can see how road congestion in bigger cities also helps this Apps acceptability among customers.
In some areas of the country, specifically the West, it is significantly more common to give rides to people on the side of the road. Coming from Birmingham, AL, my dad always told me never to let strangers in the car or pick up hitchhikers, but one of my friends in Colorado hitches a ride to work every single day. It’s the culture there, and it isn’t unusual for many many people to get to work that way. I think if the carpooling app really catches on, it could potentially have a huge environmental impact by reducing the number of cars on the road. In addition, this has the potential to change the way people perceive strangers and make friends. I will be very interested to see how well this catches on in less innovative areas than San Francisco.