As Uber and Didi's 99 grapple with driver shortages and high fuel prices in Brazil, Taxi.Rio, an app developed by the Rio city government, is gaining riders
less than half of what Uber was asking.” Uber faces an unlikely competitor in Brazil: the government's taxi app https://restofworld.org/...
Context & Ripple Effects
Taxi.Rio lands at a vulnerable moment for the platforms. Brazil is Uber's second-largest market, where it had logged a billion rides in four years and claimed profitability, while 99 — scaled with a $100M SoftBank raise before Didi moved to buy it — competes head-to-head. With drivers scarce and fuel costs high, the city-run taxi app is undercutting Uber's fares and pulling riders away.
The story also previews a pattern in Brazilian local government: shifting from regulating platforms to competing with them. That arc continued when a local government launched the Valeu delivery app against iFood, and turned openly adversarial when São Paulo banned motorcycle taxis, putting the city in direct conflict with Uber and 99.
First-order effects
- Uber and 99 are losing riders in one of Uber's most important markets to an app charging less than half of Uber's fare, exactly when driver shortages already cap their supply.
- Rio's licensed taxi drivers gain a city-backed demand channel that routes fares around the platforms' cut.
Second-order effects
- Other Brazilian city governments now have a working template — the same playbook later produced Valeu against iFood — making municipal governments a new class of competitor alongside private platforms.
- To hold share, Uber and 99 must lean harder on driver incentives and price cuts in a market Uber once cited as profitable, compressing margins precisely when fuel costs are squeezing drivers off the apps.
Third-order effects
- If cities keep playing both referee and player — São Paulo's motorcycle-taxi ban as the coercive lever, Taxi.Rio as the commercial one — Brazilian ride-hailing becomes a market where public operators help set both the rules and the price floor.
- For Didi, which reportedly valued 99 at $1B in its acquisition talks, a durable state-backed rival erodes the strategic worth of its Brazilian foothold and raises the cost of defending second-place positions everywhere governments can field their own apps.
The trend: Brazilian city governments are evolving from ride-hailing regulators into state-backed competitors, forcing global platforms to fight for share on publicly run turf.