Google's new venture: Like Uber, but for commuting

Commuters in San Francisco (Getty)
Commuters in San Francisco (Getty)

Google is taking on Uber in the ride-sharing business.

Commuters in San Francisco will soon be able to use an app to connect with drivers heading in the same direction.

The company has been testing the service with 25,000 people employed by local tech companies. But it is now launching it across San Francisco.

Commuters will use the Google-owned Waze app to find out which drivers are willing to give them a ride. The service has been running in Israel since July 2015.

Google is not promoting the service as a direct rival to Uber, Lyft or the traditional cab companies. Rather it is presenting it as a way for commuters to carpool and for drivers to cut down on their vehicle running costs.

Passengers will pay less than for a ride with Uber, Lyft or a traditional taxi. The company wants to make the fares low enough to discourage drivers from operating as taxi drivers.

In fact, it says the income is not taxable because the money pays for the gas. That is because Google says the drivers will be taking money to help pay for the cost of their petrol, or electricity charging.

It also looks like Google is not planning to check the drivers before they join the service.

There is no guarantee there will always be a driver going to the destination the commuter wants to go to, or is willing to take the time to pick them up and drop them off.

Uber and Lyft trialled similar services. Uber is testing what it calls UberCommute in Chengdu, China.

Lyft launched Lyft Carpool in March, but suspended it after saying it could not attract enough interest from drivers.

Some analysts believe the Google venture is a first step towards a full taxi service.

The venture ramps up Google's rivalry with Uber. Both are developing driverless cars.

Market researcher IHS Automotive estimates that since 2014, Google has been investing US$30 million (NZ$41 million) per year in self-driving cars.

Uber has spent US$300 million (NZ$410 million) developing its own self-driving car technologies. It has begun testing robotic cabs in Pittsburgh.

Driverless cars are essential to Uber's business model. It lost US1.27 billion (NZ$1.75 billion) in the first half of the year.

A major cost is the fees it pays to its drivers. It spent US$2.7 billion (NZ$3.72 billion) on driver fees in the first half of 2015. So one way to lower its costs is to move to driverless vehicles.

Google is valued at more than US$500 billion and has a diversified business. So it has the resources to develop self-driving electric cars for years without having to make a profit from them.

Despite the growing rivalry, Google's parent company Alphabet remains an investor in Uber.

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