Entrepreneur Felix Ruiz, co-founder of the privately-held firm Auro which owns the cars and licences and employs the drivers, told Reuters Auro had decided to switch them to either Uber or Bolt or both from Jan. 20.

The Spanish company could fall to No.2 in its home turf, as Cabify and Uber have about the same market share in Madrid, according to Auro estimates.

Uber and Cabify declined to comment on their respective market shares.

On Monday, Cabify said that an arbitration court ruling in June obliged Auro's fleet to keep working with the app, but Ruiz, although acknowledging that Cabify had won the arbitration, said the contract with Cabify had been cancelled and his company was prepared to defend its decision in courts.

Ruiz doubted the two could still reach an agreement.

"We are not aligned," he said, adding that he considered Cabify's rival Uber to be "more efficient as its algorithm allows for higher earnings", while Bolt's advantage was charging less in a bid to gain market share.

Auro's pool of 2,500 delivery riders is already working with Uber Eats and other retailers.

Madrid, where Cabify started operating a decade ago, has about 8,000 vehicles licensed for ride-hailing services, and competition is rife between apps which have been branching out into scooters, bikes and grocery deliveries.

Cabify, which is considering going public but has not announced any firm plan to issue shares yet, had global revenues of $516 million in 2021, and over 5.4 million registered users.

It uses the services of 230,000 drivers across its markets in Europe and Latin America. It has 441 direct staff in Spain, according to a recent company presentation.

(Reporting by Inti Landauro, additional reporting by Clara-Laeila Laudette; editing by Aislinn Laing, Andrei Khalip and Emelia Sithole-Matarise)

By Inti Landauro