​Taxify vs Uber: Why the ride-hailing rivalry is set to intensify over drivers and fares

With new funding, ride-hailing app Taxify will give Uber a run for its money but faces the same regulatory issues.

In 2013, the then 19-year-old high-school student Markus Villig created ride-hailing app Taxify, which quickly changed Estonia's taxi market several years before the arrival of Uber.

Rather than calling a dispatcher to order a taxi, a customer could choose between different taxis, taxi companies, and fares in a dedicated app. Also, taxi companies that had signed up with their fleets got detailed information and statistics about their performance.

In recent years the company has showed steady international growth. Since it has also established its own fleets, its operating model has come to resemble that of other ride-hailing apps.

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Taxify currently has over 200 employees, 100 of them are situated in Tallinn headquarters. It has local offices in 19 countries around the world, operating in cities from Vienna to Cape Town.

In August, the company announced it had received a huge investment from Uber's archrival Didi Chuxing. Markus Villig's older brother Martin, who is the co-founder and expansion manager of Taxify, tells ZDNet that the investment was eight-digit number in euros, and Didi only received a minority holding.

"Taxify's co-founders remain the majority owners," confirmed the older Villig, who 10 years ago helped to build up Skype's web backend team. Before fully committing himself to Taxify, he was a vice president at one of Estonia's most successful startups, Fortumo.

"We'll use Didi's know-how and investment to mainly solidify our position in our core markets in Europe and Africa. However, we're always on the lookout to expand to new countries," he says.

In his opinion Taxify's biggest advantage over Uber is lower commission.

"Taxify takes only 15 to 20 percent commission from its drivers, which is up to half the commission taken by Uber and other ride-hailing platforms. The lower commission allows Taxify to offer lower prices for riders and more take-home pay for drivers," Taxify's co-founder says.

"The service also allows drivers to create a defined radius for pickups, meaning they don't need to stray too far from home," Taxify's co-founder said.

Taxify also sees a lot of growth in corporate business, having created a service for corporate riders to get one monthly bill with all the ride details.

The ride reports include details on every ride along a map with route. Companies get access to a control panel, where they can manage which employees use the business-payment method.

"Taxify Business solution has been introduced only in the Baltics and a few other countries. The percentage of business rides is still rather small. However, the number of business rides is constantly growing," explains Villig.

As the company is set to expand its business and tread on the toes of Uber, like its San Francisco-based rival, it's constantly wrestling with regulatory issues. It decided to leave the Finnish market at the beginning of this year, arguing that the local business environment was closed and market monopolized.

Now, also just like Uber, Taxify ran into a lot of problems in London, where it had to halt its services, which Villig put down to "an unwelcoming reaction from TfL [London's transportation authority]".

He still hopes to relaunch the service in UK's capital as soon as possible.

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"Some markets try to set unreasonable rules on purpose to avoid open competition. We believe that most industries and services can operate with self-regulation, and this also means fair competition between platforms and sharing-economy service providers," he says.

"If one platform becomes too dominant in its industry, it might not operate in the best interests of its consumers and service providers."

In his opinion, legalizing ride-hailing services such as Taxify could also help countries integrate immigrants.

"Another aspect is a number of immigrants who would like to work, but often face challenges entering the job market due to the language and other barriers. Currently, governments have to pay costly social benefits for those people," Villig says.

"By legalizing sharing-economy services and operating via new technology platforms, many of those people could get flexible job opportunities and pay taxes for the government. It would be a win-win situation for everybody: an alternative is offered to those who would like to enter the job market, consumers get more affordable services, and governments can turn their cost into income."

Villig tells ZDNet that in the coming years the company will continue to strive to utilize its data and AI technologies to become the most efficient transportation provider in the region.

"Ultimately, we aim to win over the market share in Europe and Africa in the following years. The biggest difficulty is balancing the demand and supply, making sure both drivers and riders are happy and enjoy the service."

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Like archrival Uber, Taxify ran into a lot of problems in London, where it had to halt its services.

Image: Taxify

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