Former competitor files antitrust suit against Uber
Uber used illegal practices to stifle competition and obtain a monopoly that drove a smaller rival out of business, a company affiliated with now-defunct ride-hailing pioneer Sidecar alleges in a federal antitrust lawsuit filed Tuesday.
“It was never a fair fight,” Sunil Paul wrote in a blog post about the legal action taken by SC Innovations, which Paul, who co-founded Sidecar Technologies and was its CEO, calls a successor company. Sidecar went bust in late 2015. “That’s why Sidecar failed. And it’s also why both drivers and passengers are left with higher prices and fewer choices today.”
Uber strongly disputed his premise.
“Ridesharing is a highly competitive industry, with many players coming and going over the years — like Sidecar, not all have survived,” Uber said in a statement. “Sidecar’s lawsuit has it backwards: new competitors, along with low prices, benefit consumers and reflect the exact type of competition that the antitrust laws are meant to protect.”
The suit, filed in U.S. District Court in San Francisco, comes as Uber prepares to make its Wall Street debut. The suit enumerates Uber’s alleged misdeeds while portraying Sidecar as Uber’s primary U.S. competitor, barely alluding to the role of Lyft, a ride-hailing company that is still going strong. The legal action targets only Uber.
Uber and Lyft, both based in San Francisco, last week submitted confidential regulatory filings as a first step to going public on Wall Street. Uber raised that point. “We believe the timing of this complaint, filed three years after Sidecar went out of business, is not a coincidence,”
Uber said.
Paul said the lawsuit coming on the heels of the IPO filing was purely coincidental.
“The decision to file the lawsuit happened before the IPO announcement,” he wrote in a text.
Uber now commands about 70 percent of the U.S. ride-hailing market versus 30 percent for Lyft, the suit said — a figure that is backed up by credit card data reported elsewhere. The suit does not discuss Uber’s international business, where it faces strong competition and has sometimes ceded markets to local rivals.
Uber started in 2009 as an app-summoned blackcar service. Sidecar started offering paid rides in personal cars, also app-summoned, in 2012. It was first to provide features such as estimated fares, estimated trip durations and carpool rides, the suit says. Lyft also started offering paid rides in personal cars in 2012, although the suit does not mention that.
In 2013, Uber started UberX, which provided rides in personal cars and quickly became the company’s main business.
“With the launch of that service, Uber became hell-bent on stifling competition,” lawyers from Quinn Emanuel Urquhart & Sullivan said in the suit. (That firm also represented Waymo in its blockbuster suit claiming Uber stole its self-driving intellectual property. Uber settled that case by paying Waymo $245 million worth of stock.) They say the illegal practices included predatory pricing (subsidizing driver payments and passenger fares). After Sidecar went out of business three years ago, Uber lowered driver pricing and raised fares, the suit said.
“Without competition from Sidecar to keep its prices in check, Uber now is imposing its will on both passengers and drivers in the form of higher, supra-competitive prices,” it said.
Uber sabotaged Sidecar and other rivals with campaigns to submit fraudulent ride requests, the suit says, then either canceling the rides or using the trips to persuade drivers to work exclusively with Uber. Lyft made the same accusation against Uber in 2014, and it was largely substantiated at that time.
In early 2016, General Motors bought Sidecar’s technology and assets, and hired about 20 of its employees, not including Paul. That technology reportedly underpins a ride-hailing service GM and its San Francisco Cruise subsidiary are developing for future robot taxis.