Uber agrees to list all ~14K New York City taxis on its app, rolling out later this spring; fares will be roughly the same for taxi rides as for Uber X rides
Company that vowed to disrupt the U.S. taxi industry is now betting that traditional taxis will fuel its next wave of growth
Context & Ripple Effects
Uber’s agreement reverses a market structure visible in 2015, when its affiliated NYC cars already outnumbered medallion cabs; taxi operators had responded by building their own Uber-like Arro hailing app and testing GPS-based fares. Rather than competing only for riders, Uber is now making the taxi fleet inventory on its marketplace.
The arrangement also establishes a model Uber soon applied with Yellow Cab SF and Flywheel in San Francisco, suggesting the company sees licensed taxi fleets as supply it can aggregate rather than displace.
First-order effects
- New York’s roughly 14,000 taxis gain access to Uber’s rider-demand channel, while Uber expands available ride inventory without adding an equivalent number of Uber X vehicles.
- Rough fare parity between taxi rides and Uber X puts the immediate rider choice on availability and service within the Uber app rather than a sharply differentiated price.
Second-order effects
- Arro and multi-taxi aggregators such as Karhoo face a distribution disadvantage if drivers and riders can reach the same taxi supply through Uber’s larger marketplace.
- Taxi operators’ own booking channels become less central as Uber controls the consumer interface and the matching of trips to participating cabs.
Third-order effects
- If the San Francisco-style expansion continues, ride-hailing competition shifts from replacing regulated taxi fleets to aggregating them, concentrating rider demand in a smaller number of apps.
- Licensed taxi fleets may increasingly operate as supply partners to marketplaces, making platform access a more important competitive lever than a standalone taxi app.
The trend: Ride-hailing platforms are moving from disruption of taxi fleets toward aggregation of those fleets as on-demand supply on their own marketplaces.