With Its $1 Billion Investment in Lyft, Google Throws Shade at Uber

Javier Stokes
October 23, 2017

It also can turn around and fund a competitor, which is what Google's parent company did when it announced Thursday that its growth equity fund led a $1 billion investment in Lyft, four years after its venture capital arm invested in Uber. Six months ago, Lyft raised $600 million from a conglomeration of investors.

The funding round was led by CapitalG (formerly known as Google Capital), the strategic investment arm of Google's corporate parent Alphabet, and takes the valuation of Lyft up to $11bn. As part of the arrangements done to facilitate the $1 billion financing on Lyft, David Lawee, a partner in CapitalG, is also joining the ride-hailer's board of directors. "Ridesharing is still in its early days and we look forward to seeing Lyft continue its impressive growth".

But while the stake in Uber is worth a lot more than the stake in Lyft, the two companies have an increasingly frosty relationship, based largely on a fractious court case concerning stolen self-driving auto technology. General Motors, for example, invested $500 million in Lyft in January 2016 and the two agreed to start developing self-driving vehicles. GM president Dan Ammann told Reuters this week that any further plans to collaborate with Lyft were "not defined at this time". The great interest Alphabet has in this small ride-hailing startup indicates that the Waymo autonomous vehicle technology might get better integrated into Lyft's transportation system.

Uber, which is valued at almost $70 billion and is the industry's dominant force, has been grappling with scandals over its corporate culture and business practices.

This year, Waymo sued Uber, alleging trade-secret theft, in a case that is set to go to trial in December.

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In February, Waymo, Google's self-driving auto company, had filed a lawsuit against Uber for allegedly using its stolen technology on autonomous driving.

"It is completely rational to me as an investor to take all of the money off the table now given all of the drama, all of the toxicity, all of the DOJ investigations", he said.

The event that brought Lyft a total of $1 billion underlines once more Alphabet's divergence from Uber.

"This thing likely goes up from here", Maris said. These scandals have benefited Lyft in one way or the other as the two companies are locked in a battle for supremacy in the United States. Claims from people who sought anonymity revealed that Lyft has held talks with various investment banks regarding the public offering scheduled for 2018.

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