Alphabet is holding talks with the ride-hailing app Lyft regarding a possible investment of about $1 billion, according to Bloomberg. Lyft is the arch-rival of Uber, which is involved in an ongoing legal tussle with Google spin-off Waymo; thus, it makes sense for Alphabet to invest in Lyft. Interestingly, Alphabet also holds a stake in Uber through its GV venture capital arm.
Alphabet investment to support Lyft’s expansion plans
Lyft has recently been focusing on controlling spending, and therefore, an Alphabet investment would help the San Francisco startup boost growth by offering subsidies to drivers, discounts to riders and so on. Lyft is already spending big on marketing as it has started a television campaign this month starring Jeff Bridges, notes Bloomberg.
Over the past few months, Lyft has rapidly expanded its operations in the United States and is now looking to Canada, according to The Information. In Canada, the company will likely start with Vancouver and Toronto. Vancouver could be a challenge, given the fact that it is situated in British Columbia, the province which does not allow any ride-sharing services to operate. However, lesser-known ride-sharing apps are active in the province.
In San Francisco, the company has expanded its shuttle service with a total eight routes, and it has six sroutes in Chicago. Lyft Shuttle offers shared travel along a designated route for a fixed fare. The shuttle service also has a scheduling feature which enables commuters or travelers to book a ride a week in advance.
In April, Lyft raised $600 million in fresh funding, increasing its valuation from $5.5 billion to $7.5 billion. A fresh round of investment now might postpone the company’s plan for an initial public offering in 2018, says Reuters, citing sources. If the reports about the potential Alphabet investment are true, then Lyft seems to be cooling down on its earlier statement, in which it said that there would be no fresh round of fundraising before its IPO, notes Reuters.
As of now, there have been no comments from Alphabet or Lyft about the investment rumors.
Lyft to replace Uber
This Alphabet investment might be aimed at keeping Lyft on its side amid the legal battle with Uber. This was evident when the company offered promotional code for a Lyft ride for the upcoming Pixel 2 launch event. While Google offered such promotional codes for past events also, it used Uber promotional codes. Then in May, Waymo teamed up with Lyft to work on developing self-driving technology.
Uber is currently involved in a few lawsuits and is facing at least three probes in the United States. After founder Travis Kalanick gave up the CEO post, Dara Khosrowshahi, former Expedia CEO, was brought in to fill the position. Uber is reportedly looking to get an investment from SoftBank Group and others to the tune of $12 billion, which could allow existing shareholders to cash out.
On Thursday, Alphabet shares closed down 1.08% at $940.13. Year to date, the stock is up almost 19%, while in the last year, it is up more than 19%.