Lyft is in bed with the regulators and Uber is stuck in the cold

By Carmel DeAmicis , written on February 6, 2014

From The News Desk

In recent weeks, the conversation around ridesharing and safety has kicked up a notch.

First, there was the death of 6-year-old Sophia Liu after she was hit by an Uber driver. Then came our investigation into an Uber driver who had slipped through the company's background check, despite having done prison time for a felony. Soon after Liu's family filed a wrongful death lawsuit. Most recently there was the leaked email Uber sent to its black car drivers requiring them to undergo their first ever background checks from the company.

Throughout all this, Lyft has remained largely silent. It managed to deftly navigate the incident of one of its drivers hitting an elderly pedestrian. It was relatively unscathed by its first reported driver assault case. In both instances, local media reported the news but not many others. Despite being the second biggest TNC, Lyft has stayed out of the safety crisis limelight.

So it's worth noting that the first time Lyft lands a bunch of headlines related to safety is for something positive. Yesterday the company announced via a blog that it has organized a "Peer-to-Peer Rideshare Insurance Coalition" with none other than the California Public Utilities Commission (CPUC) as a fellow founding member. From Lyft's blog:

This working group of transportation companies, regulators, insurance providers, and other stakeholders has come together to address how the insurance industry can continue evolving to support the growing peer-to-peer economy…The coalition’s mission is to build a foundation of insurance best practices, policies, and information for P2P ridesharing.
We've reached out to the CPUC to vet that it is a founding member, and will update this post when we hear back.

[UPDATE: Here's what CPUC's President, Michael R. Peevey, had to say about the coalition:

I’m happy to see this diverse set of participants come together to find a market solution that will enhance insurance for the TNCs.  I will keep a close eye on this and if there is an insurance gap that has been identified and confirmed then I will propose regulations that could close the gap if the market has not stepped in to do so.  My Chief of Staff and the Director of the CPUC's Policy and Planning Division will be a part of the coalition to monitor its progress and to ensure that whatever solution is created is in the public interest.
It's a stupendous PR move for Lyft, a positive development for the ridesharing industry, reassuring for drivers, and really shitty for Uber. Lyft hasn't released the list of coalition members yet, but Uber spokesperson Andrew Noyes confirmed to Pando that Uber is not part of it.

When we asked Lyft whether Uber and Sidecar were invited to the coalition, a Lyft spokesperson responded with a selective answer, "Sidecar has been invited to be part of the Coalition… the focus of the Coalition is on the P2P rideshare space." We've asked for clarification, but haven't heard back.

Amid the safety, security, and background check scandals Uber is suffering, Lyft has clearly decided to direct the conversation in a different way. It's proactively trying to position itself on the side of "safety first," and it's doing so with actions and not just words. Instead of saying "safety is our top priority" Lyft is showing it, teaming up with the state ridesharing regulator to have these conversations, at least about insurance.

The ridesharing coalition isn't just well-timed PR for Lyft. The company has had a close relationship with the CPUC since the extended legalization hearing process. In fact, Lyft is arguably CPUC's  favorite ridesharing company. In the CPUC's ruling on ridesharing, it basically admitted that.

From page 23 of the decision:

"Additionally, Lyft has been the only TNC that has acknowledged that safety is not only a priority, but there should also be some overarching rules and regulations. We applaud Lyft for its leadership in this area and we certainly agree with Lyft in this area."
Where does this leave Uber? Out in the cold. Lyft's response to Pando's question about whether Uber was invited to the coalition suggests that Uber was not. In some ways, this is both surprising and not surprising at all.

Lyft has no reason to extend an olive branch to its biggest competitor, especially given that Uber has aggressively gone after it, using what some would consider to be dirty tactics. Uber ran "Shave the Stache" campaigns and anti-fist bump ads on Facebook, offered UberX for free in the markets Lyft expanded to, and sent recruiters into Lyft cars to convince them to drive for Uber instead.

Throughout all this, Lyft has stayed largely silent. It's a weird role reversal because in business it's usually the little guy going out of his way to antagonize the bigger competitor, not the other way around.

Now, it looks like Lyft is having its comeuppance, by shutting Uber out of an industry wide coalition that it has organized. It could backfire mightily on Lyft if Uber chose to point that out, because it doesn't jive with Lyft's brand of being all about community.

But if not, then Lyft benefits. It continues to develop its relationship with regulators, show the public it's leading the industry in safety, and watch Uber dig itself deeper and deeper into the public condemnation hole.