With Lyft's official launch in New York City this week, Uber may have a lot more to worry about.
What initially made Lyft a great competitor to the transport giant was the contrast in the two services' respective models. Uber's ride-sharing model is centered around professionally licensed drivers, which is what allowed it to thrive in the good graces of the NYC Taxi and Limousine Commission. (Lyft suffered delays because of its failure to comply with regulations.) Lyft's traditional model allows anyone willing to submit to a background check to be a driver, sans the $5,000 up-front fee. This true peer-to-peer function is what makes Lyft so different from (and a major contender to) the Uber business. At least that's what makes it different from Uber in every other city besides the Big Apple.
But on Friday evening, the popular ride-sharing service officially hit the streets in all five boroughs of New York City. The catch? Due to a legal controversy, Lyft no longer offers that true ride-sharing perk in the city, the one function that is fundamental to its traditional model and, arguably, what made it an attractive competitor to Uber in the first place. Lyft has, instead, agreed to only use TLC-licensed drivers.
So in striking a deal with the TLC for the sake of operating in New York City and gaining a potential 8 million users, Lyft cut out the one feature that distinguishes it from its fellow ride-sharing peers, particularly from Uber whose presence in New York City is primarily rivaled by the NYC taxi market. Lyft, however, has commented that the elimination of its sharing function is temporary until it can work with the TLC to resurrect its original model. When asked on "Squawk on the Street" whether Lyft could possibly revert to its ride-sharing model, NYC TLC CEO and Chair Meera Joshi responded any that company "could always come to [the TLC] with suggestions … and we are always open to new ideas." But she added that the TLC will "maintain what we've maintained from the beginning—we can't degrade our standards."