Unionization and strict city partnership contracts caused Uber to lose interest in bike-sharing company Motivate, according to recent reports. Those factors ultimately allowed Lyft to step in and make its own offer, buying the company for $250 million, CNBC reports, citing an unnamed source. In particular, unions are something Uber previously fought to avoid throughout several court cases, arguing that its drivers are self-employed rather than employees. Those haven’t always come out in Uber’s favor in areas such as London and New York but some of Motivate’s workers are already unionized. In fact, some of Motivates union workers will continue to be employed under a wholly separate company following Lyft’s acquisition. Those employees will maintain their role in the equipment servicing side of operations.
Beyond that, Motivate’s contracts with cities reportedly presented further issues for Uber. Those contracts will remain valid through the acquisition, although they could be reworked at some point. Among the more noteworthy inclusions in those is the option for a municipality to cut ties with Motivate completely if the company is bought. Moreover, conditions of some of the contracts require advanced city approval of pricing or hardware-based changes, according to the source. Although Lyft appears ready to take on that burden and is capitalizing on its decision to keep Motivate employees in operation, the contracts were simply untenable to Uber. Lyft could face pressure from city leadership in the future since the use of Motivate employees through expansion into new areas is not at all guaranteed. The employees remain fully employed by Motivate with no obligation from Lyft to utilize their services for maintenance.
The two areas of concern aren’t necessarily surprising since Uber has, as mentioned above, encountered issues with both in the past. Lyft’s record with workers hasn’t always been spotless either but the acquisition will put added pressure on Uber. The latter ride-sharing company has faced increasing competition from Lyft over the past several months. Meanwhile, both are actively pursuing bike-sharing companies in a bid to lead across the entire transportation industry. This new acquisition presents new challenges for Lyft but, with both companies also preparing initial public offerings, should prove advantageous in the long-term.