It is amazing how much financial muscle Google, or rather its parent company Alphabet, has to flex these days. When it is not funding one of its subsidiaries to erect a model 21st Century neighborhood in Toronto, it is investing on one major transportation network, and then another. Currently, the conglomerate is prominent in business news after it has been known to have landed a cool $1 billion worth in investment funding on San Francisco-based ride-sharing network lyft. This is a significant development, given that in 2013, Google, before the corporate reshuffle two years on that gave rise to Alphabet Inc., had also made its own multi-million investment in Lyft’s older competition, Uber.
Massive investment
The billion-dollar financing earmarked for Lyft was made through Alphabet’s growth investment arm CapitalG. Its announcement this Thursday, October 19, solidified rumors flying about since last month that Google is making overtures to the ride-hailing company, which is currently a far distant second to the current industry leader Uber. Alphabet’s investment brings up Lyft’s valuation to a solid $11 billion, a huge increase from its $7.5 billion standing last April. This has placed the transport network with more formidable momentum to keep competing with Uber, which has scared the older company enough that it actually got into trouble with the FBI for corporate espionage activities against Lyft.
And that is not to forget Uber’s own indiscretions against Google, or rather Waymo, Alphabet’s self-driving car R&D think-tank. Waymo is currently taking ride-hailing giant’s own self-driving arm Otto to court for charges of stealing tech designs. This is compounded by Uber’s internal problems, primarily on the public relations front.
Allegations of workplace misogyny and worse have led to the global ride-sharing leader doing some shakeups in its executive ranks and put the company under legal investigation.
From Uber to Lyft
This situation was a far cry from four years ago, when Google, pre-Alphabet restructuring, had been one of the most powerful financial buttresses for Uber, with its $258-million investment in the transport network.
This once-promising partnership went sour once Uber began dabbling in self-driving car tech, essentially intruding on the territory of Waymo. The new investment by now-Alphabet on Uber’s only significant rival, at least in the US, is seen as a definitive break between the two companies.
CapitalG, the investment arm of Alphabet, was formed in 2013 under the name Google Capital. 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. In addition, Waymo has begun collaborative efforts with Lyft in further developing autonomous car pilot programming for vehicles. The San Francisco-based company will meanwhile make use of its funding for further expansion.
