Tuesday, May 17, 2016

Waze Carpool Enters Market

Yesterday, Google parent company Alphabet announced an experimental carpooling service in the Bay Area. The service is built on top of the Alphabet-owned navigation app Waze. As described in the promotional video below, the new Waze service will allow users to automatically be matched up with carpool drivers, which means less hassle for everyone involved in carpooling.

Waze's new carpooling service.
Source: Google

As of now, the pilot service is only available to employees at a handful of tech firms within the Bay Area (1). However, coming from Alphabet itself, it serves as a significant threat for competitors Uber and Lyft. Moreover, considering Alphabet's significant progress with self-driving vehicles, a foothold in the ride-sharing market might translate into a fully-autonomous transport system (2).

Do you think the growth of the ride-sharing market is healthy for the economy? While it may let drivers make money, the work is part-time and comes at the cost of more traditional taxi services. Additionally, as more and more drivers start working for ride-sharing businesses, should companies like Uber, Lyft, and now Waze be responsible for their "employees" and their actions? Waze for instance is adopting an extremely low pricing model that skirts much of existing regulation (2). How should the government approach regulating this new market? Lastly, who do you think will win out?

Sources:
(2) Quartz
(3) Telegraph
(4) Verge

21 comments:

Jonathan Liu said...

You know I wanna say that Lyft has a new carpooling service that directly mirrors Waze's (or I guess Lyft's came to the US first so Waze mirrors Lyft's) but either way I don't see why this could be bad for the market. Competition is always good, and carpooling helps the environment too which is a plus. Besides, Waze seems like a pretty nuanced program, as it only allows people to pick up rides to and from work as a carpool instead of a service that drivers can use for profit, so I don't think it would have a huge effect; also, the only advantage it seems to have at this point is its prices and its parent company. However, because of the limited function of Waze, the price wouldn't be that big of a deal. Introducing a new public transportation system would cause way more trouble to Uber and Lyft in SF than Waze will, and SF already has an expansive transportation system in MUNI and BART.

Daniel Jun said...

Any talk about the dangers of using Waze have already been pointed out in full with the dangers of Uber drivers and the like. Although, the low pricing model does inspire some worry. Could that end up increasing the odds of danger for all parties involved? Although, I feel that the government interfering in this field would mainly be viewed as unnecessary governmental action in the market. When someone ends up filing a lawsuit, some change may happen.
Isn't growth in this sector of the economy bound to be a good thing? This is effectively a more convenient form of public transportation. Ever since Uber took America by storm, this field has increased. Considering that Google and Uber are effectively buddy-buddy, I have to give it to Uber. Uber's probably going to win.

Langston Swiecki said...

Observing the relationship between all three companies in the Bay Area as time progresses should provide interesting insight into the nature of developing markets before winners and losers emerge and the market shifts to resemble something more like an oligopoly. There is further room for optimization and there is still chance of a decent market share, and this combination of factors is the main mean through which capitalism can spur progress and address societal wants, so I view Waze's move as a beneficial one, all in all. What interests me about this scenario is the relative fluidity of the drivers themselves, by which I mean that they can switch employers with little to no physical displacement or time displacement, meaning that the market will set an equilibrium wage with greater rapidity than it otherwise might, granting each company relatively less control over the wage and incentivizing the companies to provide comparatively higher wages and greater benefits. If waze does not out offer Uber or Lyft, it will have a hard time procuring drivers, which will necessitate alteration assuming they still wish to be competitive. Uber has recently made strides towards providing greater benefits towards those who drive a substantial amount of hours, so I would not be surprised to see others following suit, and the larger competition should prove to be rather insightful.

Jeffrey Song said...
This comment has been removed by the author.
Jeffrey Song said...

I do think that a distinction should be made here between the potential commuters using this "carpooling service for commuters in California’s Bay Area" represented by this emerging Waze Carpool and the 'professional' drivers that make their livelihood by working for Uber/Lyft. Whereas the latter two are able to fulfill specific requests and take the rider wherever they need to go at virtually any time, the equivalent of a taxi, Waze Carpool is currently only for Waze users who are already going in the same direction to carpool together primarily to/from work. Waze Carpool won't take requests yet, so for people seeking a reliable transportation service at all periods of the day and to any location, Uber and Lyft will definitely still be their current best option.

However, it will be interesting to see if this initial experiment in Silicon Valley / the Bay Area works out and the potential for future growth in this industry. The industry itself is already quite over saturated with willing employees, (Uber drivers earn much less and compete much harder with each other than we think they do) so an additional competitor could spell an even more competitive and difficult to succeed in future for these essentially self-employed drivers. Waze Carpool has the potential and room for massive growth, funded by Google, and in the future when combined with driver less cars could cause a great deal of trouble for Uber & other competitors. However, as of now, I think this is more of an experiment by Google more than anything, a step into the market to gauge public interest and profitability. Currently, "riders pay the IRS-recommended 54 cents per mile to pay for gas and vehicle costs, and Waze doesn't take anything off the top.."

Sources:
http://bgr.com/2016/05/16/waze-ridesharing-carpool-uber-lyft/
http://qz.com/686281/google-is-launching-its-own-ridesharing-service-uber-lyft-and-everyone-else-should-be-worried/

Russ Cheng said...

I don't think that the lower rates Waze offers will negatively impact the safety of these methods of transportation; if anything, Waze could potentially steal part of the market away, forcing competitors to lower their rates or increase efficiency by keeping their more qualified drivers. I also find it interesting that, by framing the program as a carpool program, Waze may be able to avoid the insurance problems faced by Uber and Lyft. Addressing Langston's point about the fluidity of drivers, since drivers will be on regular routes, might they have contracts (Sorry, couldn't find anything about this)? In any case, Waze is but another example of a shift from full-time to contingent and contractual workers. Rest in peace taxi drivers...

Cami Nemschoff said...

Numerous times while riding in Ubers/Lyfts I have asked the drivers, out of curiosity, about the process of becoming a driver. The process, which is scary for separate reasons, seems that it would highly benefit the economy. Driving for a company such as Lyft/Uber and now Waze allows people to almost automatically get a job. This seems like the ideal situation for someone who is unemployed and seeking to make some cash. As of now, these companies can give out unlimited jobs which seems like something that can greatly help the economy. That being said, because the process is so easy many drivers are able to gain employment even when they should not. I have heard countless horror stories of ex murderers and rapists driving cars, which clearly presents a flaw in the system. Overall though, in terms of the economy, I see these types of services being beneficial.

Jared Mayerson said...

I agree with Jonathan that there really can't be any downside to this. I don't see Waze's new program catching on as much as Uber's and Lyft's but that doesn't mean anything bad (except maybe for Waze). This will give commuters yet another option to carpool on their way to work, helping to reduce traffic and help the environment. To me, it seems like a "win-win" situation for all. Uber and Lyft may lose a small amount of users to this new program with Waze but, besides that, nothing large will change. Waze's addition to the market will only attract new people to the carpool market.

When I was visiting a college in New York City, I had to take a Lyft both to and from the airport. Although this was their normal service and not the carpool version, I learned that Lyft and Uber allowed my driver to make a good living once he immigrated from Italy. It was an easy, enjoyable job for him. Expansion of carpool services, like Lyft, Uber, and now Waze, will help people who like to use this as a way to earn a living and may even attract new drivers to even further expand the market.

Jong Lim said...

I agree with Russ that lower rates will not make the rates as competitive. Since lower prices will drive rates down for the same service, it will be inevitable that Uber and Lyft will change. However, it seems that Waze will die out since Uber and Lyft already have some time in the competition, while Waze was previously just an app that everyone uses, I feel that Uber and Lyft will survive in the long term. Sure, Waze will be in the market for a time, just not on demand as much as Uber and Lyft.

Grant Hillman said...

I personally see no drawbacks to Waze entering the carpool market. More businesses trying to carve out a place in the market means increased competition, which in turn will (hopefully) create a better product as companies try and outdo the others. If Waze offers lower rates, this is beneficial for the consumer because competing companies will likely lower their rates in response, leading to lower prices overall. And, as Jonathan pointed out, carpooling is good for the environment. I don't really see any negatives in this new development.

Janet Liu said...

Are ride-sharing services really more cost-efficient and environmentally friendly? Consider a daily morning commute from say, Millbrae to 16th Street Mission in SF. That's about 15 miles of driving distance; 30 for a round trip. If you decide to take public transportation, say BART, one day's round-trip will cost you $9.20, or $0.31 per mile. Ok. Let's say you decide to drive. The average regular gas price in San Francisco is $2.81; $0.67 higher than the national average. According to fueleconomy.org, the most fuel efficient car is an electric one: the BMW i3 BEV has a combined mpg of 124. Go electric cars! But the next best, and more realistically affordable option, is maybe a Toyota Prius, which brings your mpg down to 42 per gallon. At $2.81 per gallon and 30 miles per day, you're spending $0.07 per mile, or $2.00 a day. Uh oh. Waze Carpool claims to charge users "just $0.54 per mile," 27x the price of driving yourself, and not even close to competitive when it comes to price of BART. And the electric train, which holds upwards of 100 people per ride, is more environmentally friendly by far compared to the 2-3 person cars that still power CARpool. Waze Carpool's higher price might be justified by the fact that the drivers themselves have to earn a living, but from the standpoint of a person who wants to make an environmentally conscious decision at a lower cost, mass public transportation, which is still pretty time-friendly in terms of getting to work, is still the way to go. Perhaps what we're really paying for when we use private driving services is a more pleasurable commute and less guilt, but like eating a salad drenched in dressing, the end result isn't quite what you'd expect. You get what you pay for, and the danger isn't that three different private driving services edge each other out, but that we believe these alternatives are necessarily better for the environmental health of our society. Better to arrange your own carpool, and skip the 54 cents.

http://qz.com/686281/google-is-launching-its-own-ridesharing-service-uber-lyft-and-everyone-else-should-be-worried/
https://www.fueleconomy.gov/feg/best/bestworstNF.shtml
http://www.gaspricewatch.com/CA-california/San-Francisco/gas-prices/page-1/2.htm
http://www.travelmath.com/drive-distance/from/San+Francisco,+CA/to/Millbrae,+CA
https://www.bart.gov/tickets/calculator

Jessica Westmont said...

Honestly I think companies should stop continuously making these car services cheaper and cheaper. I was in an Uber the other day and the driver told me he quit his job 2 years ago to become a full time Uber driver and at the time Uber charged higher rates, and the company took about 10% of the drivers profits. Within the past 2 years Uber has continuously lowered their rates to keep up with companies like Alphabet they take 30% of the driver's profits. These people start driving for Uber because they think it is going to be great, however their salary keeps getting lowered over time because of all this competition. I personally believe all of these companies will be successful and all of them will probably "win". However the way they are getting their wins are by hurting their drivers.

http://www.huffingtonpost.com/david-fagin/life-as-an-uber-driver_b_4698299.html
http://studenomics.com/earning-more/driving-for-uber/

Kristen Tamsil said...

Uber and Lyft have disrupted the transportation industry as we know it. They help "force" a change in a way we see alternative transportation. All methods of transportation will still be around for a long time to come; from publicly shared mass transportation such as trains and busses, to taxis, Uber, Lyft and now Google Waze's based car-pooling initiative. Regulations around transportation need to adapt to these transformations quickly to protect not just the public but also the employees employed by these companies. The economics will dictate how much these workers "make" as a profession, just like any other jobs. The cost of these various alternatives of transportation also will continue to vary. Convenience trumps the "per mile" cost of going from point A to point B and there will always be people who are willing to pay more for that. What is more important is to realize that technology continues to disrupt existing business models at rapid speed and government still holds the key to ensuring that these disruption do not impact the safety of services from all angle. In other words, the government holds the key to ensuring civic responsibilities are put above pure profit. These new age companies need to continue to push the envelope and work closely with civic government to ensure safety and fairness. Eventually, I believe the self-driving car will dominate public transportation - offering both convenience, affordability and safety. Then there are no jobs for Taxi drivers, nor Uber/Lyft drivers. Driving for money is one of those jobs that will disappear over the next few decades.

Marly Miller said...

Waze may help the economy because it will contribute to the competition aspect in the transportation industry. However, the only downside is the loss of revenue for workers in older transportation (Like MUNI or BART). This also reminds me of the entrepreneur ideas in Econ. Lyft, Uber, and Waze allow many to make a living on their own. However, because of the growing popularity of these industries, some may want to take control in order to gain profit from each driver.
In regards to the self-driving cars that are a possibility, if these become a part of Waze and gain popularity, the competition may prove to be harmful. In Econ we have been discussing how technology replaces workers and eliminates many jobs. Using self-driving cars would almost eliminate the need to Uber or Lyft and these drivers would need to find other sources of revenue. There needs to be a balance between the convenience of technology and its effect on the labor market and workers.

Monika Kepa 1 said...

The Taxi services are dying out because they did not modernize fast enough yet they offered similar services with stable jobs and known regulations. Furthermore there was a sense of safety when getting picked up by a taxi because they were responsible for you and were monitored by the company, meaning that the companies knew which car and which driver went to what address to pick a person up and in many cases were to drop them off. Whether realistic or not companies like waze which work off having unchecked citizens who do not have licenses for more commercial use carries risks. These people could be under the influence when driving others, just be terrible drivers, or even be predators and these companies would not know in many if not all cases the background of the people who are offering rides using their services. I am interested to see how it plays out, what regulations are placed if any and if they come as preventative regulations or in the aftermath of tragedies.

TJ Bonbright said...

I think that the rise of companies like Waze and Uber is a good thing, for it increases competition in the transportation market. If taxi services wish to compete, then they need to up their game. The same goes for Waze, Uber, and Lyft. Having ridden in Uber cars as well as taxis, I can say that the overall quality of Uber seems to be quite higher. The drivers show up in suits and are very professional in the way they go about assisting customers. Taxis, on the other hand, can be less enjoyable, especially those transporting people to and from the airport. Always in a rush to drop off their current customer to race back and pick up another, taxicab drivers can seem a little cold and detached from the customer. Therefore, the lack of competition from taxis makes sense when you compare the experience of a ride in a taxi to that in an Uber.

Lea Tan said...

Waze helps increase the competition among the transportation market, but it also makes taxi cab drivers lose customers and Waze drivers probably earn less because their services are cheaper. Nonetheless, it does help create more jobs in the job market because being a driver for one of these services does not require a large skill set, and if you are willing to work long hours, you can make enough money. I do think that ride-sharing services are overall beneficial for people (although not necessarily the economy) because they're convenient and cheaper. Like Janet said, it may not be more fuel efficient than some public transportation alternatives such as Bart, but you can't get everywhere with Bart. Some places in the Bay Area are not super close to a Bart station, so car services are much more convenient. I think the most concerning part of Waze is that Alphabe and Google are gaining control over many areas of the economy (too much control?) and if they were to eventually reach a fully autonomous transportation system, it would definitely cause a surge in unemployment. The increase in technology has replaced many jobs humans would normally take, making it harder for people with a smaller skill set to find a job.

Dhruv Rohatgi said...

I think of Waze, Uber and Lyft as innovation in the tech world. These ride sharing application are creative destruction. It is not necessarily bad to have ride sharing apps like this simply because it is cheaper. I understand that an entire industry of taxi workers are going out of business but that should not stop innovation. Additionally, they could become full time Uber drivers. Agreeing with Tj's point, Uber drivers do tend to nicer than taxi drivers and maybe Taxi drivers are now upset because they used to be a service people had to use but now people have more than one option so their poor service is no longer acceptable. This accountability is something that has made the taxi sore and they are not willing to adjust. Just like Sports Authority, those who do not adjust to the industry are generally left behind.

Andrew Wang said...

With more and more competition in terms of "Middle man" hire car services, I think that there will be continued competition for more market share as especially Uber expand to more and more countries. With the direction that Uber is taking the business, more and more people are joining Uber for a side job they determine their own schedule for. A problem has been raised about the accountability of these drivers and if Uber, lyft, and Waze will do more to regulate drivers so that riders have a minimal risk entering a car. Currently there is a way for drivers to report riders that might make a mess in their car, but there is really no way for riders to be protected while driving in an Uber. There is a rating system that tells you how other riders thought of the ride, but that can only tell you so much. In terms of regulation, I doubt that this service will be getting any specific regulation anytime soon, but if there are more problems that exist with hire car services, there might just be some action done on the state and local level.

Virginia Hsiao said...

I remember reading somewhere that back when Uber was starting up, investors like Mark Cuban did not invest in Uber since they believed service Uber wanted to provide was not robust enough -- which goes to show how unpredictable the market is and how consumer interest remains variable. Even though the ride-sharing market is currently fairly successful and widespread, there is a chance that oversaturation of the market with services like Waze might end up causing difficulties down the line. On one hand, while increased competition will put pressure on the market to provide increasingly advanced and more affordable services, overdependence on this market may cause long term problems going forward. In terms of regulation, I believe that the companies should take responsibility given that majority of casualties result from traffic incidents. If the food industry has regulatory agencies such as the FDA, perhaps this industry should have something similiar -- especially if it is becoming increasingly widespread. In terms of success, I think that whichever company can adapt the quickest and respond the most effectively will win out.

Rachael Howard said...

I think that while it is a good idea, I also think that it is essentially the same thing as lift and uber. However since I think it is closely connected with google, it is going to become even more popular than uber and lift already are. Although this company makes rides slightly more convenient, I feel like they also don't provide that much incentive because the driver isn't really making any money they are just covering gas. Also while it is more convenient, it is still an inconvenience so I don't think people will want to pick others up since their profit doesn't seem to be all that much. I also wonder what safety and other precautions they are going to take. For example I know uber has certain requirements the driver's car has to meet as well as background check on the driver's. I also wonder how the payment works, I'm assuming it is through paypal or something like that but I also wonder how they determine what the passenger has to pay since the price of gas is always changing and it differs depending on what area you are in. I also wonder if this app allows the passengers can tip the drivers like they can when using lift or if it is like uber and it is just a flat rate.