Uber sued by San Francisco's Flywheel, formerly DeSoto Cab

Uber is being sued over its business practices by San Francisco's Flywheel, formerly DeSoto Cab, also known as SF's oldest taxi company. According to Flywheel, since Uber's entry into the business in 2012, the city's taxi industry had lost 65 per cent of its riders and 30 per cent of its drivers, SF Gatereported.

Flywheel further claimed this was the result of Uber setting prices between 10-and-45 per cent lower than that of taxi services, and that Uber could cover the cost due to investments from well-heeled venture capitalists. The allegations also include Uber misrepresenting its safety, pricing and potential earnings for drivers as well.

"This lawsuit is about holding Uber responsible for their unlawful practices," Flywheel CEO Hansu Kim told the publication. "It is not about stifling competition or technological innovations. We want all on-demand taxi services to be treated fairly under the law, and competing on an even playing field."

According to Flywheel, Uber would drive out all of its competitors, create a monopoly and then jack prices up because it would be the only option available.

Meanwhile, NBC Bay Area reported that according to Flywheel's lawyers the case could take over a year to be resolved.

''In reality, Uber has done little more than implement a business strategy that openly flouts the law while shifting many of the costs and nearly all of the risks of providing ride-hail services from itself to its drivers and passengers while forcing a race to the bottom through predatory pricing tactics - where, propped up by billions of dollars in venture capital funding, Uber will remain until its illegal strategy has forced all other competitors from the market,'' the lawsuit states.

In other words, according to Flywheel, Uber had leveraged its billions of dollars in venture capital to be able to offer rides to people at a price significantly lower than what it cost to operate a ride-hailing service sustainably.