Lyft expands its market as Uber staggers under controversies

Lyft is introducing its service in new cities around the United States, as Uber's market share ticks downward.

First Look

As Uber tangles with scandal, Lyft is angling for a bigger piece of the ride-hailing market.

The nation’s second-largest ride-sharer launched in 10 new US cities on Thursday, following launches in 40 new cities in January and 50 more in February, according to TechCrunch. That makes 100 new cities in 2017, a goal the company says it’s reaching a full nine months ahead of schedule.

But Lyft remains far short of its main US rival. Uber operates in some 560 cities around the world, compared to Lyft’s 300. Uber is also valued at about $70 billion, while Lyft is still shy of $7 billion, according to Reuters, even if it succeeds in its current efforts to find $500 million in new investment.

But the milestone underscores the latter's quick expansion, and raises questions about whether Uber’s public-relations problems will give Lyft and other competitors an opening. 

Among Uber’s main troubles are a sexual harassment scandal that has occasioned the launch of an Eric Holder-led panel to investigate sexism at the company, protests over Uber chief executive Travis Kalanick’s participation in a presidential economic advisory council, and a videotaped argument between Mr. Kalanick and an Uber driver who took issue with management decisions.

And on Thursday, the company said it would stop using a secret program called “Greyball” to identify and escape code-enforcement officers in cities around the world – a program that some legal experts argued constituted obstruction of justice.

Greyball was initially designed to protect Uber drivers in cities where taxi drivers and workers had attacked them, as The Christian Science Monitor's Ben Rosen reported earlier this week:

But Uber soon realized it could expand Greyball, part of a program called “Violation of terms of service” (VTOS), to sidestep government officials and others in cities where it faced restrictions or was banned. According to the Times, when Uber moved into a new city, it appointed a general manager to oversee the expansion. This person, using a sort-of Greyball playbook, would try to spot and trick enforcement officers and other city officials.

When an account was greyballed, the user was shown either a set of ghost cars in a fake version of the app or no cars at all. If a driver accidentally picked up someone identified as an officer, Uber called the driver with instructions to cancel the ride.

In the late-January wake of the #DeleteUber campaign – stemming from the company’s continued service to airports during protests of President Trump’s travel ban – consumer-spending firm TXN Solutions found that Uber controlled about 83.5 percent of the market, compared to Lyft’s 16.5 percent, reported CNBC. Over the next month, Uber’s share declined to 79 percent, while Lyft broke its long stall by expanding to 21 percent.

According to the Verge, Lyft’s expansion this week includes the cities of Lawton, Okla., and McAllen, Texas, where Uber is not yet offering its services.  

This report contains material from Reuters.