Uber Looks a Lot Less Exclusive

Some are framing this news as a solution to Uber’s supposed need to add driver supply to meet recovering demand. The some 14,000 taxi cabs it will add as a result of the deal will certainly help where an imbalance exists. And it will no doubt provide a way to bolster supply around New York City’s cap on for-hire vehicles. Still, Uber says its driver supply in New York City is “the highest it’s ever been since the pandemic.” Others see it as a bid to make friends with an enemy: In its public offering filing, Uber lists taxis among its three key competitors, as well as car ownership and public transportation.

But ultimately, Uber’s move to add taxis is really just the continuation of a larger push that has been long under way to build a “super app.” Just as its website boasts, “Now you can go anywhere and get anything with Uber.” The downside: The company, once known for its sleek, private on-demand black cars, seems to be increasingly accepting commoditization of its rides in order to achieve brand ubiquity.

Uber takes issue with the concept of commoditization, but says the idea is to put as many methods of transportation on the app as possible so that one never needs to go anywhere else. Uber has for years partnered with the taxi industry internationally and its app today also offers public transportation routes.

So, you might soon take an occasional taxi over a traditional Uber on Uber’s app, but at least Uber will be getting a cut when you do. The all-in-one concept is awfully reminiscent of Chief Executive Officer

Dara Khosrowshahi’s

prior post leading

Expedia

(now Expedia Group), which grew to become a one-stop shop for all things online travel.

Uber’s shares rose nearly 5% Thursday on news of the New York City taxi agreement, even while the company has been hinting for some time now that it is moving in that direction. JPMorgan analyst

Doug Anmuth

said in a note Thursday he was surprised less by Uber’s move to embrace New York City taxis and more by the speed of execution on its goal to capitalize on the taxi industry. The agreement also means Uber would have an advantage in time-to-market and technology integration if

Lyft

came to announce a similar deal, he said.

In its investor-day presentation, Uber cited $400 million in gross bookings from taxis last year with the expectation that it can grow to recognize more than $3 billion in gross bookings in the space by 2024. Evercore ISI analyst

Mark Mahaney

notes New York City yellow cabs generated about $1.4 billion in fares in 2019, citing data from the New York City Taxi and Limousine Commission.

As of last month, Uber taxi was live in 27 countries. New York City passengers will pay roughly the same fare for taxi rides as for Uber X rides, according to the Journal’s report Thursday. As of last month, Uber said about 90% of its trips are on some version of Uber X (as in, not shared, not scheduled in advance, not in a taxi or on a motorcycle, etc.). While taxis will bring incremental rides to Uber, it is unclear if they will bring incremental profits. Taxi rides will generally have lower take rates, but will also have lower cost structures.

Uber has said riders who use Uber for more than just a solo Uber X ride spend more and have higher retention than single-product riders. Now, winning for Uber doesn’t mean never taking a taxi; simply that you never hail your own taxi again.

Write to Laura Forman at laura.forman@wsj.com