Flywheel takes Uber to court, says ride-hailing giant has an illegal monopoly

In the latest courtroom attack against Uber, competitor Flywheel says Uber is taking over the industry and must be stopped.

San Francisco-based Flywheel sued the ride-hailing giant Tuesday, claiming Uber holds an illegal monopoly on the market.

Flywheel, which lets riders use an app to hail a taxi, was intended to give taxis a fighting chance against Uber — but judging by the lawsuit, it hasn’t gone very well so far. Since 2012 the taxi industry has suffered a 65 percent decline in ridership, and has lost more than 30 percent of its drivers, according to the complaint filed in federal court in San Francisco.

Flywheel’s lawyers claim Uber controls about 70 percent of San Francisco’s ride-hailing market. Last year the startup forced competing ride-hailing app Sidecar out of the game.

That’s because Uber is behaving badly, Flywheel says:

“Uber has done little more than implement a business strategy that openly flouts the law while shifting many of the costs and nearly all of the risks of providing ride-hail services from itself to its drivers and passengers while forcing a race to the bottom through predatory pricing tactics — where, propped up by billions of dollars in venture capital funding, Uber will remain until its illegal strategy has forced all other competitors from the market.”

Flywheel says Uber is illegally driving taxis out of business through a price war that licensed cabs cannot win. Uber constantly slashes its prices for riders while giving drivers subsidies to encourage them to drive, Flywheel’s complaint says. As a result, Uber can charge below-market rates, and though the startup loses money on those rides, Uber’s massive venture capital-funded war chest allows it to shoulder those losses.

If it is allowed to keep up those practices, Uber will drive out all other competition and will be able to force customers to pay whatever it wants, according to the complaint.

Uber responded to the lawsuit in a statement emailed to SiliconBeat: “We compete with lots of way to get around, especially car ownership. Our goal is to provide a credible alternative to the private car. Our technology lets us make our network more efficient over time, and innovations like UberPool are further lowering prices, making ride-sharing more available to more people.”

Flywheel didn’t stop with the monopoly allegation. The rest of the lawsuit reads like a laundry list of every accusation ever lobbed against Uber by the startup’s enemies.

Flywheel’s other allegations include: Uber doesn’t provide adequate insurance coverage for drivers or passengers, forces drivers to pay out of pocket for work expenses such as vehicle maintenance, provides predatory car leases to drivers, gives drivers false promises about how money they can make on the platform, misleads passengers about surge pricing and the safety of Uber rides, and discriminates against disabled passengers.

It’s nothing Uber hasn’t heard before. Over the summer I reported that Uber was battling more than 70 lawsuits in federal courts throughout the country. So perhaps the ride-hailing giant has learned to let these accusations roll off its back.

But that doesn’t mean the latest fight won’t be pricey. Flywheel is demanding reimbursement for all the money it lost to Uber — a sum that could be tripled under federal law.

Photo: The logo of the ride sharing service Uber is seen in front of its headquarters on August 26, 2016 in San Francisco. (Photo by Justin Sullivan/Getty Images)


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  • DirtyRead

    As a ride share driver I am curious as to flywheel’s inclusion of mine and fellow drivers interests in the lawsuit. i don’t live or operate in the Bay Area so I cant speak on who things operate. I can however, speak for Southern Ca. I have read a copy of the suit before the court and found numerous inaccuracies. I have never been apart of or know of a policy of racism. I fact just the opposite in my driving experience . I have never been encouraged to avoid a certain area, people or religion. I am proud we do not. I have said this _and we pick up everyone everywhere even Harlem(if i were anywhere near Harlem i would. I have picked in in inglewood at 4am). Drivers are not mandated to rent phones Uber. only have one that supports systems app. The lease and car assist deals are terrible but for the many people unable to get a car otherwise it is a viable option. They are not only used while on line for requests they are taken home and used to take their kids to school go on dates everything those with a car do everyday. I would not do it and most regret doing so but plenty of people are grateful to be able to drive.
    I won’t go into any more of the untruths. I will say there are a lot of things as a driver I do not like with _and want changed. those issues are between myself and fellow drivers and our rideshare platform providers. our inclusion in an outside party;s despute is insulting and a huge lie. If flywheel wins on all points are they going to include us in the money. They no damn well they wont. I would not accept it.
    instead of spending all this money on killing Uber and lyft why not improve your product which it has not done since the invention of the wheel. New york forced some changes in the early2000’s but not much else,
    I would welcome a yearly safety course. But, for every driver rideshare cab and the swarms of every day people. I am the only person it seems that understands a four way closing don’t dare speak or sue on my behalf. I did not ask you to.