Alphabet to Engage $1B Investment in Lyft

Alphabet, Google’s parent company, is reportedly in dialogues with Lyft Inc., the ride-hailing company and a rival of Uber Technologies Inc., about a possible investment around $1 billion, according to a report.

Lyft Inc. last raised $600 million at a $7.5 billion valuation in April.

About Alphabet’s Investment Decision

It remains unclear what division of Alphabet the investment would come from, as the company has multiple investment arms, either from Google, or Capital G, one of Alphabet’s private equity firm.

In fact, the two companies have already built strong ties. In May, Waymo, Alphabet’s self-driving car division, sealed a deal with Lyft to collaborate on autonomous vehicle technology.

In July, Lyft announced it was forming an autonomous car unit that would be based at a new center in Palo Alto. The app-based taxi company said Waymo would be among its partners that would have representatives in the space.

Alphabet had previously invested in Uber through its GV venture capital arm.

The potential investment is said to be a remarkable one because Waymo has been locked in a bitter legal battle with Uber since February. Waymo accuses Uber to have stolen trade secrets when Anthony Levandowski, a former Google engineer, joined the ride-hailing firm. Earlier this week, a judge ruled that Uber had to turn over to Waymo the due diligence report for its acquisition of Otto.

Alphabet and Lyft declined to give any comment regarding the said investment.

Lyft’s Gains

The injection of new funding could potentially fuel the ride-hailing firm as the second ride provider battles rival Uber Tech for market share. The San Francisco-based startup can use the capital to provide and pursue more aggressive growth with subsidies for drivers, discounts for riders and marketing. It may have a chance to hurdle the momentum away from Uber in key cities by ramping up in marketing and discounts. Such large investment would also help Lyft remain independent.

This month, Lyft started off a major television campaign that stars Jeff Bridges.

Compared with Uber, Lyft has long been the small dog in the ride-hailing world. It has received $2.6 billion in venture funding and is valued at $7.5 billion, whereas Uber has received $12.9 billion and is valued at $68 billion.

However, over the past few months, Lyft has been gaining on its competitor. This is largely due to the endless slew of scandals coming out of Uber, which include everything from allegations of workplace sexual harassment to a chaotic company culture to its CEO Travis Kalanick being forced to step down.

Lyft has recently been in an expansion mode saying in August that it was available in 40 U.S. states covering 94% of the country’s population. The company is reportedly looking to expand internationally, according to a report. It could be in Canada as soon as year’s end and then move into Australia, Mexico, and the U.K.

Meanwhile, Alphabet Inc. traded 1.08%, or 10.31, to $940.13, by 5:28 AM GMT -4. It opened at $946, with a session high of $948.03, and a session low of $938.36. Its market capitalization was $649.49 billion, with a P/E ratio of 34.03.

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