Lyft finally launches in New York after abandoning 'ridesharing'

Transportation startup Lyft is finally launching in New York tonight, but it’s no longer just “your friend with a car.”

Lyft originally intended to debut in New York two weeks ago but was blocked at the city gates by the New York Attorney General and the Taxi and Limousine Commission (TLC) with a temporary restraining order for “defying” state laws.

Now, Lyft will launch with New York’s blessing after making some serious compromises. Going forward, the startup is only permitted to work with drivers licensed by the TLC, ending its peer-to-peer ridesharing model in New York.

Lyft appears optimistic that New York with eventually accept its “community-powered” system of non-commercial drivers: “We’ll continue to work with the TLC, Department of Financial Services, and the Attorney General’s office to craft new rules for peer-to-peer transportation in New York,” the company said on its blog today.

However, Lyft isn’t the only transportation startup constrained by New York law. Uber also operates a peer-to-peer ridesharing service, known as UberX, across the U.S. Yet it was similarly forced to contract only with licensed drivers in New York to comply with local laws.

Even if Lyft manages to woo local regulators, such a change may also benefit Uber. Uber’s UberX service is already cheaper than a New York taxi following a 20 percent price drop earlier this month.