Corey and Campolongo petitioned regulatory agencies in their states to allow them to operate like an ordinary cab company -- dispatching cars from a central location and picking up street hails -- and as a TNC -- connecting riders and drivers via a smartphone app.
In states that have changed the rules, there is hope that this new hybrid model will allow traditional cab companies to survive in some form. In other places, however, taxi operators describe a bleak competitive landscape where they are permanently disadvantaged by outdated regulations.
"The rule-makers have woken up to the fact that they can’t regulate Uber and Lyft out of existence but at the same time I think cab companies start out with a legacy problem," said Aswath Damodaran, a professor at the New York University Stern School of Business.
New Competitors
For Uber and Lyft, the emergence of hybrids highlights a threat to their business: it’s relatively easy to get into. The completion of an ambitious project to legalize the ride-sharing model from coast-to-coast will only enhance this threat. Meanwhile, the companies still haven’t reached profitability.
"As long as there are two players in the game, it’s very difficult for either player to make money," Damodaran said.
In the end, the regulatory relief Uber and Lyft had to seek in order to operate in the vast majority of states will open them up to new competition, according to Bruce Greenwald, a Columbia Business School professor and value investor.
"They’re damned if they do and they’re damned if they don’t," Greenwald said. "So I don’t think that there’s a good outcome for them.”
This article was provided by Bloomberg News.