The rapid rise of app-based “ridesharing” services, led by San Francisco-based companies Uber and Lyft, had a disruptive effect on the existing market. Uber and Lyft dominated the ridesharing market in the United States and many other markets, although other companies such as Sidecar and Cabulous drove key innovations in the service. By 2015 Uber was clearly the dominant firm. Despite encountering opposition from regulators and traditional taxi companies all over the world, Uber managed to expand to 58 countries and more than 300 cities. In a world of smartphones, apps, and GPS systems, the methods of traditional taxis suddenly seemed obsolete. Was ridesharing truly a value-creating innovation or just a cleverly devised scheme to mask the illegal maneuvers of an unregulated insurgent? Were Uber and Lyft just technology companies that revolutionized the market-making power of advanced data systems and free markets to serve the basic desire of every traveler to get from point to point quickly, conveniently, and cheaply? Or were they glorified illegal cab services, flagrantly cannibalizing an established taxi system?
Darden Business Publishing – University of Virginia