Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 1 of 42
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`Lewis T. LeClair (SBN 77036)
`lleclair@mckoolsmith.com
`MCKOOL SMITH, P.C.
`300 Crescent Court, Suite 1500
`Dallas, Texas 75201
`Telephone:
`(214) 978-4000
`Facsimile:
`(214) 978-4044
`
`Kirk D. Dillman (SBN 110486)
`kdillman@mckoolsmithhennigan.com
`MCKOOL SMITH HENNIGAN, P.C.
`300 South Grand Avenue, Suite 2900
`Los Angeles, California 90071
`Telephone:
`(213) 694-1200
`Facsimile:
`(213) 694-1234
`
`Judith A. Zahid (SBN 215418)
`jzahid@zelle.com
`ZELLE LLP
`44 Montgomery Street, Suite 3400
`San Francisco, California 94104
`Telephone:
`(415) 693-0700
`Facsimile:
`(415) 693-0770
`
`James R. Martin (SBN 173329)
`jmartin@zelle.com
`ZELLE LLP
`1775 Pennsylvania Ave. NW, Suite 375
`Washington, D.C. 2006
`Telephone:
`(202) 899-4100
`Facsimile:
`(612) 336-9100
`
`Attorneys for Plaintiff, SC Innovations, Inc.
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SC INNOVATIONS, INC.,
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`v.
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`Plaintiff,
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`UBER TECHNOLOGIES, INC., RASIER, LLC,
`RASIER-CA, LLC, RASIER-PA, LLC, RASIER-
`DC, LLC, RASIER-NY, LLC, AND UBER USA,
`LLC,
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`Case No. 3:18-cv-07440-JCS
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`SAN FRANCISCO DIVISION
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`Case No. 3:18-cv-07440-JCS
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`SECOND AMENDED COMPLAINT
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`DEMAND FOR JURY TRIAL
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`Defendants.
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`SECOND AMENDED COMPLAINT
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 2 of 42
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`NATURE OF ACTION
`Through an array of anticompetitive acts, Uber Technologies, Inc. (“Uber”) has
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`1.
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`stifled competition in the market for ride-hailing applications. Those anticompetitive actions drove
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`Sidecar Technologies, Inc. (“Sidecar”), a maverick, innovator, and one of Uber’s most significant
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`competitors, out of business. Uber is now a monopolist, which has harmed both Sidecar and the
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`consumers who previously benefitted from the competitive pressure Sidecar placed on Uber.
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`2.
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`The ride-hailing market is a two-sided market. Uber can exercise its monopoly power
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`by controlling both the prices it charges to consumers (riders), and the prices it pays to drivers. In
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`other words, Uber has both monopoly power over the customer side of the market and monopsony
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`power over the driver side of the market. Both sides of the two-sided market are subject to
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`substantial network effects—the more riders Uber has, the more drivers it is able to attract, and the
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`increased driver availability attracts even more riders. These network effects raise substantial
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`barriers to entry and obstacles for other competitors to compete effectively against Uber, allowing
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`Uber to exercise monopoly power. Uber exploited these barriers to entry with a “winner takes all”
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`strategy it has pursued since its inception of predatorily pricing below its costs. Because of the
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`unique nature of platforms such as this one that furnishes connections between two groups, Uber was
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`able through its “winner takes all” strategy to capture the overwhelming power over the market
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`while enjoying the protections afforded by the barriers to entry.
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`3.
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`Uber’s predatory pricing strategy has significantly weakened competition in the ride-
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`hailing applications market by eliminating or substantially weakening its competitors. Uber is able to
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`recoup its losses on its ride-hailing application business by charging supra-competitive prices, above
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`the level that would prevail in a market in which Uber faced strong competition. Uber’s predatory
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`pricing strategy is consistent with Uber’s stated business strategy as understood by its more
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`sophisticated investors. As explained in an article predating Uber’s IPO presciently titled: “Uber is
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`Basically Promising Investors it will become a Monopoly”:
`The other thing to note is that a big part of why Uber is unprofitable is
`that it pays drivers too much and charges too little for fares. Under the
`status quo, there's no way for it [to] grow into profitability simply by
`claiming a bigger market share. All of which gets us back to the
`question of why investors keep throwing gobs of money at the
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`Case No. 3:18-cv-07440-JCS
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 3 of 42
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`company. The simple story about how it's just better than its rivals
`doesn't scan. Something else is going on. The point about Uber's fares
`being too low for it to make enough money is telling. Most likely,
`Uber is making a long-game effort to price out all its rivals. "[Uber's]
`IPO documents show that it plans to keep spending heavily to win
`market share, even if it continues to rack up multi-billion dollar annual
`losses," the Financial Times reported. "It amounts to a forceful
`reminder of the company's founding mantra that ride-hailing is a
`business with strong network effects and a winner-takes-most, if not
`all, market.1"
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`Such a strategy would be unprofitable unless Uber knew it could recoup its losses
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`4.
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`from below-margin pricing in a market in which it was able to set supra-competitive prices due to
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`substantially reduced competition. Uber’s anticompetitive conduct has resulted in significant harm to
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`consumers through long-term higher prices, lower quality, reduced innovation, reduced control over
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`personal information and privacy, and reduced choice. This case is designed to compensate Sidecar
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`for the damages caused by Uber, bring an end to Uber’s anticompetitive practices, and prevent future
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`anticompetitive acts so that consumers can once again enjoy the lasting benefits of lower prices,
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`higher quality, more innovation, improved data and personal information privacy protections, and
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`greater options.
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`5.
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`In 2009, Uber launched its ride-hailing smartphone app. Uber’s app allowed
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`consumers to use their smartphones to arrange on-demand transportation in “black cars” and
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`limousines driven by licensed chauffeurs. Uber viewed any app-based ride hailing as its exclusive
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`domain, and was determined to do whatever was necessary to stamp out any threatening innovation
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`related to its business.
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`6.
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`In 2012, Sidecar debuted its own ride-hailing app. Unlike Uber’s app, which only
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`connected passengers to professional drivers, Sidecar’s app could be used by passengers to arrange
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`rides with drivers who were using their personal cars, pioneering a new concept called “ridesharing.”
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`7.
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`Sidecar’s app was the first to offer many popular features that since have become
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`commonplace in ride-hailing apps today. For example, Sidecar’s app was the first to provide
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`1 Spross, Uber is Basically Promising Investors it will become a Monopoly (The Week, April 15,
`2019)
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`Case No. 3:18-cv-07440-JCS
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`SECOND AMENDED COMPLAINT
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 4 of 42
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`passengers with estimated fares and trip durations before booking their trip. It also was the first ride-
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`hailing app capable of scheduling carpool rides between strangers heading in the same direction,
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`which could dramatically lower costs for passengers using that feature. In addition, the Sidecar App
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`provided an easy means of ensuring price-competition by private drivers, to the benefit of customers.
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`It allowed those private drivers to set their own proposed fare rates, competing with one another.
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`8.
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`In response to such competitive ride-sharing offerings from Sidecar and others, Uber
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`extended its offerings in the ride-hailing market by launching its own “UberX” ridesharing service in
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`2013, as an addition to its “Uber Black” limousine service. At the time, Uber was growing in rides
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`and revenue at a staggering pace. In 2013 alone, Uber was the dominant ridesharing platform in the
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`United States and was estimated to have grown at a rate of 364%. In addition, Uber was enormously
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`capitalized, the result of Uber’s pitch to its investors of its “winner-take-all” strategy, with the ability
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`to outlast its competitors in the ride-hailing market in a bruising price war. To be clear, neither
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`growth nor financial strength, nor price cuts, are in and of themselves anti-competitive. Indeed, price
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`cutting can be entirely pro-competitive. But, when a company with a substantial and growing share
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`of rides is intent on eliminating competition and uses predatory, below-cost price cuts as a means of
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`wielding its enormous financial strength to eliminate competition, that conduct plainly contravenes
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`the Sherman Act and injures competition. With the launch of its UberX service, Uber became hell-
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`bent on stifling competition from competing ride-hailing apps, including Sidecar. But rather than
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`compete on the merits, Uber engaged in a campaign of anticompetitive tactics, orchestrated by its
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`senior executives, a campaign designed to impair Sidecar and other competing ride-hailing apps
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`from serving as a check on Uber’s quest for a monopoly. Sidecar’s superior functionality proved to
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`be no match for Uber’s anticompetitive actions, and as a result, Sidecar went out of business in
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`December 2015.
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`9.
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`There is no dispute that Uber has and continues to price below cost, however cost
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`may be measured. Uber’s CEO has publicly admitted in security filings that Uber intentionally
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`prices its rides in certain markets below the costs paid to drivers for the ride. Thus, Uber has
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`admittedly engaged in classic predatory pricing. This case is far removed from the case of a
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`traditional manufacturing business, where a market entrant may have excess capacity in early market
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`Case No. 3:18-cv-07440-JCS
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`SECOND AMENDED COMPLAINT
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 5 of 42
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`penetration and thus may be pricing below some measures of cost during growth that it plans to fill
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`out its excess capacity. Here, Uber could never grow its way to profitability with its pricing below
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`the variable cost of each individual ride. Uber heavily subsidized payments to drivers, and at the
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`same time, it subsidized the fares it charged to passengers. As a result of these subsidies, the
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`average price paid by a passenger was well below Uber’s average variable cost for completing a
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`transaction on its platform. A cursory look at Uber’s financials shows the results of this predatory
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`conduct: Uber has lost billions of dollars, but as it expected, it has not outrun its ability to attract
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`equity and financing because in the unusual economic world of platforms with significant network
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`effects, the long run will eventually financially reward Uber’s platform for its elimination of
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`competition.
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`10.
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`Uber’s most senior officers, directors, and executives specifically planned for this
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`subsidized pricing strategy to foreclose competition. Uber intentionally sustained near-term losses
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`that were designed to drive Sidecar and other competing ride-hailing apps out of the market while
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`Uber acquired a dominant market position. When the market finally tipped in Uber’s favor and Uber
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`could leverage network effects to insulate itself from meaningful competition, it planned to raise
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`prices to consumers and reduce compensation to drivers. By imposing higher prices on consumers
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`and reducing driver compensation while it was protected by the substantial barriers to entry created
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`by network effects, Uber planned to recoup the losses it had incurred while pushing out its rivals.
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`This practice will have significant negative effects on consumers in the form of long-run higher
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`prices, lower quality, reduced innovation, reduced control over personal information and privacy,
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`and fewer options.
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`11.
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`Uber’s plan has now reached the second act. Initially, even after Uber successfully
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`eliminated Sidecar from the market in late 2015, Uber continued to price below cost in an ongoing
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`effort to weaken the only remaining significant US competitor, Lyft. This contributed to continuing
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`losses for both entities. The two-sided nature of the ride-hailing market provided Uber with the
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`incentive and ability to engage in predation on both sides of the market: (i) paying initially high
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`prices to drivers (mostly in the form of incentives), with reduced payments later as Uber moves to
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`the recoupment phase, and (ii) charging low prices to customers early, and higher prices during the
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`Case No. 3:18-cv-07440-JCS
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`SECOND AMENDED COMPLAINT
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 6 of 42
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`recoupment phase. The net effect of these actions during the predation phase is that the net price
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`received by Uber for its ride-hailing service in a large number of transactions has been less than its
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`cost of providing the service (the price paid by the customer less the payments to the driver for the
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`ride).
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`12.
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`Recently, Uber has begun to increase passenger prices in each of the markets where it
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`was previously facing competition from Sidecar, without offsetting those increased fares with higher
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`payments to drivers. Indeed, Uber has begun reducing driver payments at the same time it has raised
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`passenger prices. Given the two-sided nature of the market, Uber can achieve recoupment from
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`either side of the market for which it has monopoly power. Uber now faces no competition from
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`Sidecar to keep its prices in check. In addition, because of the network effects resulting from Uber’s
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`size and dominance on both the customer and driver side, and because of and because of Uber’s
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`discriminatory pricing, Lyft is unable to respond effectively or to increase its own share of rides as a
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`restraint on Uber’s pricing. Further, Lyft’s current status as a public company requires it to recoup its
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`own massive losses through higher prices. Thus, Lyft has not been willing, even if it were able to do
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`so, to respond to Uber’s price discrimination strategy by expanding its output or seizing significant
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`additional market share through price competition. Uber now is able to impose its will on both
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`passengers and drivers in the form of higher, supra-competitive prices. Indeed, drivers are now
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`receiving reduced compensation; and passengers must endure discriminatory pricing tactics, such as
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`surge pricing, and more recently, “dynamic pricing.” Uber has begun to reap supra-competitive
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`profits in ways that have become increasingly difficult for any competitor or customer to address or
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`constrain Uber’s monopoly power.
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`13.
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`To obtain and protect its monopoly, Uber also intentionally interfered with the
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`performance and quality of competing ride-hailing apps, including Sidecar’s app. Uber’s senior
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`officers and executives directed clandestine campaigns, including “Project Hell” and “SLOG,” to,
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`among other things, submit fraudulent ride requests through its competitors’ ride-hailing apps.
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`Those fraudulent requests were not submitted by real passengers, but instead were directly submitted
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`by Uber (or persons working under Uber’s direction). Uber intended for those campaigns to
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`undermine its competition and raise their costs, including by (a) inundating competitors with
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`Case No. 3:18-cv-07440-JCS
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 7 of 42
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`fraudulent ride requests that were cancelled before the driver arrived; or (b) using fraudulently
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`requested trips as an opportunity to convince drivers to work exclusively with Uber instead of its
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`competitors. According to Uber’s founder and former CEO, Travis Kalanick, Uber targeted not only
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`Lyft but also Sidecar and its drivers, as well as other competing ride-hailing apps.
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`14.
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`Those tactics violated the terms of service of the competitor apps and undermined the
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`value of competing ride-hailing apps because they prevented drivers from being matched with
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`legitimate ride requests. Because drivers were matched with fraudulent requests, they would be
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`frustrated with Sidecar; and real passengers who were looking for legitimate rides faced
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`correspondingly longer wait times. Long wait times were designed to cause drivers and passengers
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`to switch to alternative apps. That triggered a vicious cycle that undermined the ability of
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`competitors to challenge Uber in the marketplace.
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`15.
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`Through its anticompetitive actions, which continued at least up through when
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`Sidecar went of business, Uber stifled competition and obtained a monopoly position in the market
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`for ride-hailing apps.
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`16.
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`Those same anticompetitive actions drove Sidecar out of business. Sidecar brings
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`this action to recover the damages it sustained when it went out of business as a result of Uber’s
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`anticompetitive tactics, which tilted the playing field in Uber’s favor and irrevocably damaged the
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`competitive process.
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`THE PARTIES
`Between 2012 and 2015, Sidecar Technologies, Inc. licensed and operated a ride-
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`17.
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`hailing smartphone application in the United States. Its principal place of business was 360 Pine
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`Street, #7, San Francisco, CA 94104.
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`18.
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`SC Innovations, Inc. is a Delaware corporation with a principal place of business
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`located at 912 Cole Street, #182, San Francisco, CA 94117. In September 2018, Sidecar
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`Technologies, Inc. assigned to SC Innovations, Inc. “any and all claims and causes of action”
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`including those for “any violation of the . . . Sherman Antitrust Act [and] the California Unfair
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`Practices Act.” For simplicity, when used in this Complaint, “Sidecar” refers to both SC Innovations
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`and Sidecar Technologies, Inc.
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`Case No. 3:18-cv-07440-JCS
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 8 of 42
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`19.
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`Defendant Uber Technologies, Inc. is a Delaware corporation with its principal place
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`of business located at 1455 Market Street, San Francisco, CA 94103. Uber licenses and operates a
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`ride-hailing smartphone application in the United States.
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`20.
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`Defendant Rasier, LLC is a Delaware limited liability company with its principal
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`place of business located at 1455 Market Street, San Francisco, CA 94103. On information and
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`belief, Rasier, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`contracts with drivers using the Uber ride-hailing app.
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`21.
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`Defendant Rasier-CA, LLC is a Delaware limited liability company with its principal
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`place of business located at 1455 Market Street, San Francisco, CA 94103. On information and
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`belief, Rasier-CA, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`contracts with drivers using the Uber ride-hailing app in California.
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`22.
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`Defendant Rasier-PA, LLC is a Delaware limited liability company. On information
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`and belief, Rasier-PA, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`contracts with drivers using the Uber ride-hailing app in Pennsylvania.
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`23.
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`Defendant Rasier-DC, LLC is a Delaware limited liability company. On information
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`and belief, Rasier-DC, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`contracts with drivers using the Uber ride-hailing app in the District of Columbia.
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`24.
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`Defendant Rasier-NY, LLC is a Delaware limited liability company. On information
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`and belief, Rasier-NY, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`contracts with drivers using the Uber ride-hailing app in New York.
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`25.
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`Defendant Uber USA, LLC is a Delaware limited liability company. On information
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`and belief, Uber USA, LLC is a wholly-owned subsidiary of Defendant Uber Technologies, Inc. that
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`licenses the Uber ride-hailing app to drivers and riders.
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`26. When used in this Complaint, Uber refers to both Uber Technologies, Inc. and its
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`wholly-owned subsidiaries, Rasier, LLC, Rasier,-CA, LLC, Rasier-PA, LLC, Rasier-DC, LLC,
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`Rasier-NY, LLC, and Uber USA, LLC. Uber undertook the actions described in this complaint
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`directly and/or through its wholly-owned subsidiaries.
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`Case No. 3:18-cv-07440-JCS
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 9 of 42
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`JURISDICTION
`Sidecar brings federal antitrust claims against Uber under Section 4 of the Clayton
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`Act (15 U.S.C. § 15), for damages caused by Uber’s violations of Section 2 of the Sherman Act (15
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`U.S.C. § 2). This Court has federal question jurisdiction over those claims pursuant to 28 U.S.C.
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`§1331 and 28 U.S.C. § 1337.
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`This Court has supplemental jurisdiction over the claims brought by Sidecar under the
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`California Unfair Practices Act pursuant to 28 U.S.C. § 1367.
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`VENUE
`Uber has a regular and established place of business in this District. Uber’s corporate
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`headquarters is located at 1455 Market Street, San Francisco, CA 94103.
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`Uber committed or directed the anticompetitive acts described in this Complaint from
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`within this District. Accordingly, venue is appropriate in the Northern District of California pursuant
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`to 28 U.S.C. § 1391, 28 U.S.C. § 1404(a), and 15 U.S.C. § 22.
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`INTRADISTRICT ASSIGNMENT
`Pursuant to Civil Local Rule 3-2(c), this is an Antitrust action to be assigned on a
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`district-wide basis.
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`RIDE-HAILING APPS
`Ride-hailing smartphone applications (“Ride-Hailing Apps”) are software platforms
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`that facilitate transactions between operators of cars (“Drivers”) and individuals that are looking to
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`obtain transportation (“Passengers”). Passengers use Ride-Hailing Apps on their smartphones to
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`arrange transportation with Drivers that are using the same Ride-Hailing App. The user interface of
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`a Ride-Hailing App can be different for Passengers and Drivers, but Passengers and Drivers use the
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`same software platform, which is remotely hosted and delivered over the internet. The companies
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`that license and operate Ride-Hailing Apps are commonly called transportation network companies
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`(“TNCs”).
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`To use a Ride-Hailing App, a Passenger opens the App and enters the address of his
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`or her destination. After the destination is entered, the App will provide estimated wait times for
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`different types of cars (black cars, sedans, SUVs, etc.), the estimated time of arrival at the
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`SECOND AMENDED COMPLAINT
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 10 of 42
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`Passenger’s destination, and estimated total fare for the trip. Once the Passenger confirms that he or
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`she would like to request a ride, the GPS receiver in the Passenger’s smartphone relays his or her
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`location to Drivers using the same App.
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`Drivers using the App near the Passenger’s location will receive an alert and an
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`invitation to accept the ride request. The Ride-Hailing App then matches the Passenger with a
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`Driver who has accepted the request, and the Passenger can track the Driver’s route until he or she
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`reaches the Passenger’s location. Upon arrival, the Driver picks up the Passenger and takes him or
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`her to their selected destination.
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`Following each ride, the Driver and Passenger are invited to “rank” each other. A
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`Driver’s average rating is visible to Passengers in the App, and a Passenger’s average rating is
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`visible to Drivers.
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`Before using a Ride-Hailing App, Passengers must download the App to their
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`smartphone and create a profile that links a form of payment (e.g., a credit card) to the App.
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`Drivers must also download the App to their smartphones. Before they can accept
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`ride requests and start transporting passengers, Drivers typically must submit an application that
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`provides proof they are a licensed driver, registers their automobile with the App, and includes the
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`information necessary for the completion of the TNC’s background check. Once a Driver’s
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`application is approved, he or she can start using the App.
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`The following images demonstrate this process for users of the Sidecar app:
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`MCKOOL SMITH HENNIGAN, P.C.
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 11 of 42
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`Figure 1: Sidecar Passenger App Screenshots
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`Figure 2: Sidecar Driver App Screenshots
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`MCKOOL SMITH HENNIGAN, P.C.
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 12 of 42
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`Ride-Hailing Apps are free to download, but they are not free to use. Passengers pay
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`a fee at the end of each ride (usually a fixed booking fee, plus a variable fee based on distance and
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`time traveled, subject to a prescribed minimum), the TNC normally retains a percentage of the
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`Passenger’s fare (as a commission for facilitating the transaction), and the balance of the passenger’s
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`payment is remitted to the Driver. Payment is made electronically through the App, and the entire
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`transaction occurs automatically upon completion of each ride.
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`Ride-Hailing Apps have automated a number of functions to improve convenience
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`and efficiency in ride-hailing. As a few examples, when using a Ride-Hailing App, Passengers can
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`easily and quickly split fares, tip drivers without cash or credit card, select trip details and desired
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`automobile features, and automate receipts and expense reports.
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`Ride-Hailing Apps also provide significant benefits and additional flexibility for
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`Drivers, including the ability to:
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`choose their own hours and work schedule; and
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`supplement their ordinary job with a second source of income from providing
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`transportation services with their own personal cars.
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`TRANSPORTATION NETWORK COMPANIES
`Uber introduced its ride-hailing app in 2009. At first, Uber’s App only connected
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`Passengers to limousines and town cars operated by professional drivers. Uber’s App was
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`enormously successful, but the services were principally focused on airport trips and traditional
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`business car service customers.
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`In 2012, Sidecar introduced its Ride-Hailing App, which could be used by Passengers
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`to arrange rides with Drivers who were using their personal cars. This new concept was called
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`“ridesharing.”
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`Lyft, Inc., another TNC, launched a Ride-Hailing App focused on ridesharing that
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`same year.
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`In the years that followed, Sidecar continued to innovate and develop new, cutting-
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`edge features that offered additional functionality beyond that which was available in Uber’s App.
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 13 of 42
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`Sidecar was the first company to allow Passengers to enter their destination before
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`booking a ride, so that its App could display the estimated price for the ride, as well as the expected
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`trip duration and arrival time.
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`Sidecar also was the first TNC to roll out an automated carpooling feature to match
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`Passengers heading in the same direction and allow them to share the same car (and split the fare).
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`Sidecar also was the first Ride-Hailing App to provide several key features for
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`Drivers, such as turn-by-turn directions within the App and the ability to link ride requests (known
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`as “queueing”). Sidecar’s Ride-Hailing App also allowed drivers in its network the ability to readily
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`adjust the prices that they offered for their services, by, for example offering percentage discounts
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`off the default ride price calculated by the Ride Hailing App.
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`Uber and Lyft have since copied many of Sidecar’s Ride-Hailing App features and
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`implemented them in their own Ride-Hailing Apps, where they have become popular product
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`features. Today, for example, “shared rides” account for more than 50% of Uber’s trips in San
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`Francisco.
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`Between 2012 and 2015, Sidecar’s Ride-Hailing App could be used by Passengers
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`and Drivers in San Francisco, Austin, Los Angeles, Chicago, Philadelphia, Washington, DC, New
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`York, Seattle, San Diego, San Jose, and Boston.
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`At the peak of its operations, Sidecar’s Ride-Hailing App was facilitating more than
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`35,000 rides per week, and it had obtained a meaningful share of the market in several U.S. cities.
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`For example, as of late 2014, Sidecar estimated that it held between a 10% and 15% market share in
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`the markets for Ride-Hailing Apps in San Francisco, Los Angeles, and Chicago.
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`By mid-2014, Uber operated in all of the cities where Sidecar operated (San
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`Francisco, Austin, Los Angeles, Chicago, Philadelphia, Washington DC, New York, Seattle, San
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`Diego, San Jose, and Boston).
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`From the moment Sidecar released its App, Uber recognized Sidecar as a real
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`competitive threat. With the introduction of ridesharing, Sidecar offered safe, reliable rides to
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`Passengers at a lower price point than Uber’s luxury black car service. And Sidecar’s App offered
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`additional features and flexibility, including allowing Drivers to use their own personal vehicles to
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`MCKOOL SMITH HENNIGAN, P.C.
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`LOS ANGELES, CA
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`Case 3:18-cv-07440-JCS Document 73 Filed 02/04/20 Page 14 of 42
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`provide transportation.
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`Uber’s CEO, Travis Kalanick, was not happy with the prospect of competition from
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`new Ride-Hailing Apps, “most notably Lyft and Sidecar, whose goal [was] to offer incredibly low-
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`cost transportation.” In a public “white paper,” Kalanick announced that Uber would introduce its
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`own ridesharing service in response to the new, “far cheaper product” offered by Sidecar and Lyft.
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`By 2013, Uber launched its own ridesharing service, which it called UberX.
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`RELEVANT PRODUCT MARKET
`Ride-Hailing Apps constitute a relevant antitrust product market. A hypothetical
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`monopolist that was the only present and future supplier of all Ride-Hailing Apps likely would
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`impose at least a small but significant and non-transitory increase in price (“SSNIP”) for each
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`transaction completed through Ride-Hailing Apps. Because Ride Hailing Apps are a two-sided
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`platform, that SSNIP could be imposed by raising the prices paid by Passengers, reducing the
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`payments made to Drivers, or both.
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`Not enough Passengers would respond to a SSNIP by switching to other means of
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`hailing transportation to render such a price increase unprofitable. Ride-Hailing Apps are cheaper,
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`mo