Uber Launches Software Service

Uber has started marketing the software behind its ride-hailing business to other companies.

The new software-as-a-service (SaaS) initially will focus on public transit agencies, starting next month with a pilot program in California with Marin County Transit.

How it Works

Users in Marin County, which is just north of San Francisco, will see a new option called Marin Connect on their Uber smartphone app that allows them to book a ride in one of four wheelchair-accessible vans operated by the county.

Shared rides can be booked by people traveling in the same direction. But during the coronavirus pandemic, occupancy of the 6-seat vans will be limited to the driver and two passengers.

Riders pay the $4-per-mile fee ($3 for Marin Access members) directly to Marin Transit, which will pay a flat monthly subscription of about $3,500 to Uber. Discount vouchers for Uber trips to and from transit stops could generate another $70,000 for the ride-hailing company over the two-year pilot.

Marin has offered a subsidized on-demand ride service since 2018. But ridership has been very low, which county officials attribute to requiring users to download a separate app. The new program sidesteps that issue by piggybacking on the Uber app.

Why it Matters

The deal is Uber’s first SaaS contract in what potentially could become a steady revenue stream for the struggling ride-hailing giant, which has seen a significant drop in ridership during the coronavirus outbreak.

Uber says it’s talking with dozens of other transit agencies around the world about similar programs.

“This is not a one-off,” David Reich, who heads Uber Transit, tells Bloomberg News. “This is a new product and a new business.”

The deal with Marin County comes a week after Uber lost its bid to JustEat Takeaway to buy food delivery specialist Grubhub. Uber, which has identified food delivery as a key growth market, is exiting other non-core businesses, including the recent sale of its Jump bike-sharing subsidiary to Lime.

With growing uncertainty about when demand will return for its main ride-hailing business, transit subscriptions and other SaaS contracts could provide Uber with some much needed cash.