Ensuring a Level Playing Field for Rideshare

Over the last few months, Lyft has been in active conversations with the New York City Taxi and Limousine Commission about how to most equitably implement the minimum earning standard passed by City Council in August of last year. Today we’re taking legal action to ensure the TLC’s implementation plan does not advantage Uber in New York City and lower driver earnings. It’s no secret that Uber has tried to put us out of business in the past. They’ve failed repeatedly, and the TLC should not assist them in their efforts.

To be clear: This legal action is not directed at the law passed by New York City Council, but rather at the TLC’s complex formula for implementation. The TLC’s proposed implementation would have negative consequences for drivers, riders, and Lyft.  

Specifically, if the law is implemented as the TLC proposes:

  1. Uber’s market position in NYC will be further advantaged, at the expense of smaller players such as Lyft.

  2. Per ride payment will lead to lower driver earnings overall

  3. The TLC’s complicated formula actually incentivizes congestion

The TLC’s complicated utilization rules will cement Uber’s dominance in NYC — which would have negative consequences for drivers, riders, and Lyft

The TLC’s implementation approach adds a utilization rate — a number indicating the amount of time drivers for each company spend with a passenger in the car. Lyft knows that raising utilization is important to reducing congestion and boosting driver earnings. We also need to ensure drivers are available to give rides to all riders who need them. It’s a delicate balance that we’re always working to strike.

Instead of setting an industry-wide utilization rate in the formula that will at all times apply equally to each of the four ridesharing companies, the rule passed by the TLC allows any company to use its own company-specific utilization rate. That approach was adopted without any study by the TLC of its likely effects. In the rush to pass the implementation rules, it adopted an approach that will advantage the largest company, in which an immediate and perpetual advantage allows the market leader to charge lower prices and undercut its competitors, with the effect compounding over time.

Providing a pricing advantage to Uber hurts our ability to offer the best and most competitive experience for both drivers and riders. Examples of this back and forth that have benefited drivers include Lyft’s pioneering in-app tipping and instant payments for drivers, features Uber has since copied.

Per ride payment will lead to lower driver earnings overall

We advocated openly and directly to the TLC for a weekly pay formula, which would allow us to avoid raising all passenger prices. But the way the TLC structured the rules makes this impossible — in direct violation of Local Law 150.

While a per-ride payment would result in higher driver pay per-ride, the TLC’s approach doesn’t account for the drop in ride requests that per-ride payment will lead to. We know that when prices increase, passengers take fewer rides, which means lower earnings for drivers.

TLC formula incentivizes congestion

The TLC’s approach also shifts pay towards time rather than distance, and in doing so incentivizes driving in areas where traffic moves slowly: Manhattan’s central business district. In short, being paid more to sit in traffic leads to more traffic.

For these reasons, we are filing a lawsuit arguing that the TLC’s approach does not comply with New York law, that the approach was arbitrary, and that it will not solve the issue it was designed to fix. Our goals are to protect New York: to help drivers earn more, to reduce congestion, to ensure riders can move throughout the city affordably and reliably, and to preserve the competition that keeps all companies striving to be better.