Tech Industry

SF cab company sues Uber for 'predatory' pricing

Flywheel Taxi says Uber uses its billions to put rivals out of business and create a monopoly.

Flywheel Taxi is suing ride-hailing company Uber for charging below-cost fares with the ultimate aim of erasing competition.

uber-ios.png
Uber

In a lawsuit filed in US District Court for Northern California, San Francisco's oldest cab company also alleges Uber has misled consumers about pricing and safety; lied to drivers about what they could earn; discriminated against passengers; and illegally hiked fares during peak hours.

"Propped up by billions of dollars in venture capital, Uber has sustained substantial losses as a result of subsidizing drivers and offering transportation at prices significantly below Uber's cost," Flywheel Taxi alleges in the suit filed Wednesday. "Once all competitors have been forced from the market, Uber...will be free to charge exorbitant prices for all ride-hail transportation in San Francisco."

Once known as DeSoto Cab Company, Flywheel Taxi partnered with software company Flywheel in 2015. The software company, which is not part of this lawsuit, has an app that lets users hail taxi rides from a smartphone.

"We don't want to hold back any technology or innovation, but Uber has so many illegal practices it's destroying the taxi industry," Flywheel Taxi CEO Hansu Kim said in an interview. "It's not fair that [taxi companies] are tied by strict rules and regulations that are for the public's benefit, and Uber can do anything they want."

Uber's technology allows it to compete with lower fares, the company said in an emailed statement. "We compete with lots of ways to get around, especially car ownership. Our goal is to provide a credible alternative to the private car."

Uber has received more than $12.9 billion in venture capital, making it the world's most valuable private company. That funding has allowed the 7-year-old company to expand dramatically, with operations in more than 450 cities in more than 70 countries worldwide. Uber last month began pilot testing a fleet of self-driving cars in Pittsburgh.

But expansion and innovation has a cost. In August, the company told investors it had lost at least $1.26 billion in the first half of the year.

Update, 3:20 p.m.: Clarifies the difference between Flywheel Taxi and the Flywheel software company.