Lyft, Inc. develops, markets, and operates a mobile app, offering vehicles for hire, motorized scooters, a bicycle-sharing system, rental cars, and food delivery. The company is based in San Francisco, California and operates in 644 cities in the United States and 12 cities in Canada.[2] Lyft does not own any vehicles; instead, it receives a commission from each booking. Fares are quoted to the customer in advance but vary using a dynamic pricing model based on the local supply and demand at the time of the booking.

Lyft, Inc.
TypePublic
IndustryVehicle for hire
FoundedJune 9, 2012; 9 years ago (2012-06-09) (as Zimride)
FoundersLogan Green
John Zimmer
HeadquartersSan Francisco, California, U.S.
Area served
United States, Canada
Key people
Logan Green, CEO
John Zimmer, President
Brian Roberts, CFO
RevenueDecrease US$2.364 billion (2020)
Increase US$−1.808 billion (2020)
Increase US$−1.752 billion (2020)
Total assetsDecrease US$4.678 billion (2020)
Total equityDecrease US$1.676 billion (2020)
Number of employees
1099917 (2020)
SubsidiariesMotivate
Websitelyft.com
Footnotes / references
[1]
Lyft's pink car mustache
Lyft's distinctive pink mustache was the first branding the company used until 2015 when it switched to a smaller, glowing magenta mustache that sits on a driver's dashboard.

With a 32% market share, Lyft is the second-largest ridesharing company in the United States after Uber.[3]

HistoryEdit

 
A Lyft vehicle in Santa Monica, California, with the original grill-stache branding, since retired

Lyft was launched in the summer of 2012 by computer programmers Logan Green and John Zimmer as a service of Zimride, a long-distance intercity carpooling company they founded in 2007.[4][5]

Green had the inspiration for Zimride after sharing rides from the University of California, Santa Barbara campus to visit his girlfriend in Los Angeles. He had used Craigslist’s ride boards but wanted to eliminate the anxiety of not knowing the passenger or driver. When Facebook opened its API to third-party developers, Green said he thought "Here’s the missing ingredient."[6] Zimride linked drivers and passengers through the Facebook Connect application.[7] By using Facebook profile information, student drivers and passengers could learn about each other.[8] Zimride eventually became the largest carpool company in the United States.[9][10] Green was introduced to John Zimmer through a mutual friend and the pair initially met on Facebook. The company name came from the country Zimbabwe, where, during a trip in 2005, Green observed locals sharing minivan taxis.[11][12][13] Zimride launched at Cornell University, where, after six months, the service had signed up 20% of the campus.[14][15]

In May 2013, the company officially changed its name from Zimride to Lyft.[16] The change from Zimride to Lyft was the result of a hackathon that sought a means of daily engagement with its users, instead of once or twice a year.[17]

In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, to enable the company to focus exclusively on the growth of Lyft.[18]

Whereas Zimride was focused on college campuses, Lyft launched as a ridesharing company for shorter trips within cities.[8]

Lyft became known for the large pink furry mustaches drivers attached to the front of their cars. Riders were also encouraged to sit in the front seat and fist bump with drivers upon meeting.[19] In November 2014, the company distanced itself from the fist bump.[20][21]

In January 2015, Lyft introduced a small, glowing plastic dashboard mustache it called a "glowstache" as an alternative to the large fuzzy mustaches on the front of cars. The transition was to help overcome the resistance of some riders to arrive at destinations, such as business meetings, in a car with a giant mustache.[22]

In April 2014, Lyft hired two lobbying firms, TwinLogic Strategies, and Jochum Shore & Trossevin, to address the regulatory barriers and opposition it had received since its launch.[23]

Due to regulatory hurdles in New York City, the company altered its business model when establishing Lyft on the East Coast of the United States. Lyft's launch in New York City occurred on the evening of July 25, 2014, and, in accordance with the Taxi and Limousine Commission (TLC) and the approval of the Manhattan Supreme Court, only drivers registered with the TLC were permitted to drive Lyft-branded vehicles in New York City.[24]

In August 2014, the company introduced a shared ride concept, which provides cheaper fares.[25]

In December 2015, Lyft became the first ridesharing company allowed to pick up passengers at Los Angeles International Airport.[26]

In December 2017, Lyft expanded into Canada, with operations in the Toronto, Hamilton and Ottawa metropolitan areas.[27]

In March 2018, Lyft partnered with Allscripts to create a platform allowing healthcare providers to arrange rides for patients who lack transportation to appointments. The service would be available to 2,500 hospitals, 180,000 physicians, and approximately 7 million patients.[28][29]

In November 2018, Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike.[30][31] The company also announced plans to add 28,000 Citi Bikes and expand its service.[32]

In March 2019, Lyft became a public company via an initial public offering, raising $2.34 billion at a valuation of $24.3 billion.[33] The company set aside some shares to be given to long-time drivers.[34]

In March 2020, Lyft acquired Halo Cars which pays drivers to display digital advertisements on top of their vehicles.[35]

In April 2020, Lyft laid off 982 employees and furloughed an additional 288 in an effort to reduce operating expenses and adjust cash flows due to the COVID-19 pandemic in the United States.[36] The company continued to offer scooters for rent in San Francisco, while Miami government asked Lyft to halt operations.[37]

In August 2020, Lyft began a partnership with rental car company Sixt to let users access rental cars. Most of the rental cars are owned and operated by Sixt, with 85 locations in the US.[38] Lyft receives commissions from rentals.[39]

In December 2020, Lyft announced that it will launch a multi-city U.S. robotaxi service in 2023 with Motional.[40]

In April 2021, Lyft sold its self-driving car division to Toyota for $550 million.[41][42] The division had partnerships with General Motors,[43][44] NuTonomy,[45] Ford Motor Company,[46][47] GoMentum Station,[48] and Magna International.[49] It also owned Blue Vision Labs, a London-based augmented reality startup, acquired in 2018 for $72 million.[50]

CriticismEdit

Treatment of driversEdit

Classification as independent contractorsEdit

Unless otherwise required by law, drivers are generally independent contractors and not employees. This designation affects taxation, work hours, and overtime benefits. Lawsuits have been filed by drivers alleging that they are entitled to the rights and remedies of being considered "employees" under employment law.[51] However, drivers do receive certain flexibilities that are not common among employees.[52]

On October 28, 2016, in the case of Aslam v Uber BV, the Central London Employment tribunal ruled that Uber drivers are "workers", not self-employed, and are entitled to the minimum wage under the National Minimum Wage Act 1998, paid holiday, and other entitlements.[53] Two Uber drivers had brought the test case to the employment tribunal with the assistance of the GMB Union, on behalf of a group of drivers in London.[54] Uber appealed to the Supreme Court of the United Kingdom; in February 2021, the court ruled that drivers should be classified as workers and not self-employed.[55] Uber drivers won the right to minimum wage, holiday pay, and protection from discrimination in the ruling.[56]

In March 2018, the Federal Department of Economic Affairs, Education and Research of Switzerland ruled that drivers should be classified as employees.[57]

In April 2018, the Supreme Court of California ruled in Dynamex Operations West, Inc. v. Superior Court that Dynamex, a delivery company, misclassified its delivery drivers as independent contractors rather than employees.[58] This ultimately led to California passing Assembly Bill 5 (AB5) on September 11, 2019, with a test to determine if a tasker must be classified as an employee and receive minimum wage protections and unemployment benefits. In December 2019, Uber and Postmates sued California, claiming AB5 is unconstitutional.[59] In 2020, they spent tens of millions of dollars[60][61] campaigning in support of 2020 California Proposition 22, which passed, granting them a special exception to Assembly Bill 5 by classifying their drivers as "independent contractors", exempting employers from providing benefits to certain drivers.[62]

In November 2019, the New Jersey Department of Labor and Workforce Development determined that drivers should be classified as employees and fined Uber $650 million for overdue unemployment and disability insurance taxes.[63]

In March 2021, the Supreme Court of the United Kingdom ruled that Uber has to classify all of its drivers not as independent contractors but as workers, complete with the standard benefits. This includes minimum wage and holiday pay with other potential benefits depending on the contracts.[64]

Compliance with minimum wage lawsEdit

In some jurisdictions, drivers are guaranteed a minimum wage, such as in New York City, where drivers must earn $26.51/hour before expenses or $17.22/hour after expenses. Analyses have shown that absent such laws, many drivers earn less than the stated minimum wage.[65] A May 2018 report by the Economic Policy Institute found the average hourly wage for drivers to be $9.21.[66] Reports of poor wages have been published in Profil,[67] Trend,[68] and The Guardian.[69] A 2017 report claimed that only 4% of all Uber drivers were still working as such one year after starting, primarily due to low pay.[70]

However, a 2019 study found that "drivers earn more than twice the surplus they would in less-flexible arrangements."[71]

Safety concernsEdit

Crimes have been committed by rideshare drivers[72] as well as by individuals posing as rideshare drivers who lure unsuspecting passengers to their vehicles by placing an emblem on their car or by claiming to be a passenger's expected driver.[73] The latter led to the murder of Samantha Josephson and the introduction of Sami’s Law. Lawsuits claim that rideshare companies did not take necessary measures to prevent sexual assault.[74][75] Rideshare companies have been fined by government agencies for violations in their background check processes.[76][77][78] In 2019, more than 34 women sued Lyft in the United States alleging that they were raped or assaulted by Lyft drivers, and that the company did not do enough to keep them safe[79] and that Lyft attracts drivers that plan to prey on vulnerable women.[80] Many women claim that, even after they reported their assault to Lyft, the company ignored their report and continued to allow the assailants to drive with Lyft.[81] It is unclear if rideshare vehicles are less or more safe than taxicabs. Data from Transport for London shows that more sexual offenses were committed in "Private Hire" cars than in taxis..[82]

Because it increases the number of people riding in automobiles instead of safer forms of transportation, a study from the Becker Friedman Institute at the University of Chicago tied ridesharing to an increase in traffic fatalities, including pedestrian deaths.[83][84]

Ridesharing has also been criticized for encouraging or requiring phone use while driving. To accept a fare, some apps require drivers to tap their phone screen, usually within 15 seconds after receiving a notification, which is illegal in some jurisdictions since it could result in distracted driving.[85]

Ridesharing vehicles in many cities routinely obstruct bicycle lanes while picking up or dropping off passengers, a practice that endangers cyclists.[86][87][88]

Studies are inconclusive on whether drunk driving rates have declined, with some studies showing that it depends on the city.[89]

Dynamic pricing and price fixing allegationsEdit

Due to dynamic pricing models, prices for the same route may vary based on the supply and demand for rides at the time the ride is requested.[90] When rides are in high demand in a certain area and there are not enough drivers in such area, fares increase to get more drivers to that area.[91][92] In some cases, this resulted in extreme surcharges during emergencies such as Hurricane Sandy,[93] the 2014 Sydney hostage crisis,[94] and the 2017 London Bridge attack.[95]

In the United States, drivers do not have any control over the fares they charge; lawsuits allege that this is an illegal restraint on trade in violation of the Sherman Antitrust Act of 1890.[96][97] Rideshare companies have argued that they only connect riders and drivers, set service terms, and collect fares. Uber was able to force Meyer v. Uber Techs., Inc., a lawsuit alleging price-fixing, into arbitration.[98][99]

Accessibility failuresEdit

Ridesharing has been criticized for providing inadequate accessibility measures for disabled people compared to the public transit it displaces.

In some areas, vehicle for hire companies are required by law to have a certain amount of wheelchair accessible vans (WAVs) in use. However, most drivers do not own a WAV, making it hard to comply with the laws.[100]

While companies have strict requirements to transport service animals, drivers have been criticized for refusal to transport service animals, which, in the United States, is in violation of the Americans with Disabilities Act. In one case, this resulted in a lawsuit, which was referred to arbitration.[101][102] The case was eventually ruled in favor of the visually impaired passenger, Lisa Irving, with Uber ordered to pay her out $1.1 million.[103]

Bias against minority passengersEdit

Complaints that passengers in certain demographic groups were discriminated against by drivers have prompted services like Uber and Lyft to remove identity information from advertised rides. However, once a ride is accepted, the driver gets the name and photo of the passenger, along with other information. A 2018 study in Washington, DC, found that compared to other passengers, drivers more frequently cancelled rides for African American passengers and LGBTQ and ally passengers (indicated by a rainbow flag), but cancelled at the same rate for women and men. The higher cancellation rate for African American passengers (only) was somewhat attenuated at peak times, when financial incentives were higher.[104]

Increased traffic congestion, carbon emissions, and reduced usage of public transportEdit

Studies have shown that ride-sharing companies contribute to road congestion, reduce public transport use, and have no substantial impact on vehicle ownership.[105][106]

Studies have shown that ridesharing has increased traffic congestion in cities where extensive public transport networks are in place.[107][108][109][110][111][112][113][114][115] Many people who use these services would otherwise be using public transport.[116][117] Taxicabs were noted to have lower rider waiting time and vehicle empty driving time, and thus contribute less to congestion and pollution in downtown areas.[118] However, another report noted that these companies serve as complements to public transit.[119]

In 2020, the Union of Concerned Scientists found that due to dead mileage, "ride-hailing trips produce 47 percent more carbon emissions than a similar trip taken in your own private car."[120]

Rideshare has reduced usage of public transport.[121][122] Studies have shown that rideshare took significant market share from public transportation during the COVID-19 pandemic due to concerns surrounding its infectious nature of COVID-19.[123]

Ridesharing may as a result contribute to automobile dependency.

Decline in value of taxi medallionsEdit

Values of taxi medallions, transferable permits or licenses authorizing the holder to pick up passengers for hire, have declined in value significantly. A couple of credit unions that lent money secured by medallions suffered from bank failure.[124] Taxi companies have sued ridesharing companies for various reasons, including allegedly operating illegal taxicab operations; however, they rarely, if ever, been successful.[125]


Legality of Ride SharingEdit

The legality of ridesharing companies by jurisdiction varies; in some areas they have been banned and are considered to be illegal taxicab operations.[126]

Unwanted text messagesEdit

In November 2018, Lyft settled a class action suit filed in 2014 alleging that the company had sent large numbers of unwanted commercial text messages.[127] In addition to $4 million in payments to consumers, the plaintiffs sought $1 million in legal fees.[128]

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