[dmix]

Just look how successful the products are (not talking about the companies) without heavy government intervention. Both of those would not exist if they had followed laws designed a (half?) century ago for different types of businesses. And customers love those services.

Rather than finding a common working ground that keeps customers happy that outnumber those unhappy with it by 100:1 and instead updates laws like improving landlords protection from Airbnb renters, improving access to employment insurance and health care to self employed contractors, etc it's easier to blame tech billionaires for being greedy.

[wmeredith]

Customers love Uber because it's prices are currently subsidized by VC money. Once that goes away, we'll see how competitive they are.

[empath75]

I actually preferred uber when it first launched and it was kind of expensive and you got nicer cars and more professional drivers.

[jghn]

Right. When I started using Uber, back when it was just "Uber" and w/o the various levels, it was cost-wise on par with local cabs but I always used it. The ability to get a decent experience, when I wanted it and with the online capabilities was a huge win over taxis.

[dajohnson89]

Uber black still provides that option.

[Zach_the_Lizard]

You can still use Uber black for that.

[cheath]

I don't think this is necessarily true. Much of the VC dollars Uber has are currently being used to enter new markets. It's primarily used as growth dollars, as it should be.

They lost $1.2 billion this year and spent $1 billion on trying to capture the India market alone. In several other markets they were taking a similar strategy.

My suspicion is that as a rider in a primary market, you are paying a "sustainable" (for the rider) rate. Maybe not so much for the driver. But that's a different topic.

[baddox]

Are there any good sources for Uber's unit costs versus prices? I would be surprised if all rides in all markets are subsidized by VC money. I would expect most of the VC money is being spent on expansion (more cities and more drivers) and that Uber service is actually profitable in mature markets. There are several articles claiming that Uber is profitable in the US.

[tomcam]

This is the only in-depth treatment I have found. It's damning: http://aswathdamodaran.blogspot.com/2014/06/a-disruptive-cab...

[baddox]

That is from two and a half years ago.

[stale2002]

Uber is profitable in the USA.

So I see no reason why its won't stay competitive.

[DasIch]

Apple is profitable but it certainly not competitive on pricing. Monopolies also tend to be profitable, competitiveness isn't even a concern there.

[stale2002]

????

So are Uber's prices too low, because it is being subsidized by VC money, or are the prices too high, because it is a monopoly?

You can't have it both ways.

My argument is that their prices are just fine where they are now, and that there is no upcoming price hike, because the prices, in the USA, are profitable NOW.

[darpa_escapee]

In my market, Uber undercuts the established taxi businesses.

People clearly have a higher valuation for a taxi ride than what Uber is charging because they've been paying the higher price and are still paying it when they choose another business other than Uber to ride with. Once Uber has driven out the other options, thus the need for competitive pricing, why wouldn't they capture that lost value?

[stale2002]

What I am saying is, Is that if Uber is profitable right now in the US, then this isn't "undercutting".

This is the fair, free market price. That's how normal competition works.

If they were significantly not profitable, then you can use the price dumping argument.

But since they ARE profitable, then this is the price that the free market will go towards.

[DasIch]

I can have both because there is no relationship between profitability and competitive prices. Profitability doesn't imply competitive prices and competitive prices don't imply profitability.

That Uber happens to be profitable and offer competitive prices doesn't imply anything for their prices in the future.

[rayiner]

> And customers love those services.

All else being equal, customers love paying less for the same thing. But they don't necessarily like the implications at scale. E.g. would New Yorkers vote to raise property or income taxes to make up for the $1.8 billion that would be lost from hospitality taxes?

[scarmig]

Even that's not as simple, though: if hotels all failed, they would be replaced by something else (maybe AirBnBs, maybe other things, probably a mix) that would generate economic activity and tax revenues.

Certainly adding up to less than what's lost in hospitality taxes, but it does counteract the loss to an extent.

[rayiner]

It doesn't counteract the loss, because the hotel already generated economic activity and tax revenue and then hospital taxes on top of that.

[DanBC]

> And customers love those services.

Until they die in a fire in a building that doesn't follow fire code; or are seriously injured in a possibly uninsured Uber[1] car.

[1] Uber provides insurance to US drivers. I don't think they provide it anywhere else.

[Symmetry]

The regulations that Uber is skirting are based on the problems caused by taxi drivers otherwise being anonymous. Since Uber can connect drivers to rides and handles payment the problems that plagued pre-regulation taxis aren't a concern in this case. We shouldn't reflexively assume that all regulation is bad, but we shouldn't reflexively assume that all regulation is good either. As with Chesterton's fence, always look at why something was created before saying whether it should continue or stop.

Injuries by uninsured drivers in places where valid insurance isn't required to drive isn't really a thing you can lay on Uber. It applies to every car on the road in those countries.

[Xylakant]

> Injuries by uninsured drivers in places where valid insurance isn't required to drive isn't really a thing you can lay on Uber. It applies to every car on the road in those countries.

Uber has been cited multiple times in Germany because it did not enforce the required insurance for its drivers, instead letting them drive with a private insurance.

[jacalata]

Injuries by drivers whose personal insurance doesn't cover their commercial activity is something I think you can lay on Uber.

[kwhitefoot]

> taxi drivers otherwise being anonymous.

Everywhere I take taxis the drivers have to display their name and id. Or did you mean something else by 'anonymous'?

[Symmetry]

They display those because of the medallion system, the system of regulations that Uber is ignoring.

[darpa_escapee]

Medallion systems limit the amount of traffic caused by taxis, so it isn't just limited to problems caused by drivers being anonymous.

[toomuchtodo]

Tech billionaires are greedy.

[digitaltrees]

So are you saying we should get rid of any regulation where "customers love a service" that doesn't follow the regulation?

So we should allow a contract killer for hire on-line marketplace because drug cartels would really love to book their preferred hit man from an iPhone app?

[dmix]

What part of "we should find common ground" means "get rid of any regulation"? You prove my point perfectly by ignoring all context and making it us vs them, rather than weighing the value of both sides.

The goal should be to update regulations to reflect modern reality, not destroy the massive value created by these new services (and an array of future services) by applying rigid century old hotel/taxi regulations and pigeon-holing them onto tech companies. Or punishing workers with labour and social welfare laws from a past time when everyone was in an employee/employer relationship rather than contractors.

Grey markets are almost always a reaction to inefficient, out of date, or unintended side effects of state intervention. India's economy crashing after removing the currency is a perfect example of this, it exposed a massive grey market which existed due to their famously heavy handed government policies [1] [2]. Or when anatomy research was exploding in popularity in the 1890's and access to cadavers was limited by government policy to the bodies of prisoners and orphans, leading to a massive black market of grave diggers and murders, which only stopped when the policy was updated, despite broad enforcement effort [3].

Sometimes grey markets are good for society while slow moving regulatory and judicial systems catch up to modern economic reality. Sometimes they're disastrous (see: drug war). But you can't put the rabbit back in the basket, so the sooner common ground is found the better.

[1] https://www.youtube.com/watch?v=hVwIZzGHxwc

[2] http://www.bbc.com/news/world-asia-india-35610332

[3] https://en.wikipedia.org/wiki/Burke_and_Hare_murders#Anatomy...

[digitaltrees]

I don't take issue with finding common ground, or revising regulation. I will even acknowledge that regulations are slower to change than private actors are at innovating. Which is a problem.

I agree with you that grey markets can show an inherent problem with a regulatory regime and should be viewed as providing useful information. That being said, people will always break the law, that doesn't, by itself mean there should be no law, the question is what is the right balance given the competing objectives.

But I think your examples are excellent. Regulation can definitely go to far, have unintended consequences, and create real social harm. The problem is that what is ok changes over time; right now we are comfortable with using cadavers for research, but society was not at the time due to certain beliefs in place. Perhaps we will have a similar change with stem cell research in the future such that some of the current restrictions will seem similarly antiquated. But to say that both were inherently irrational is not a fair reading of facts or history. My point is that its good to debate what regulation is beneficial and revisit the debate regularly.

There will always be a tension here, regulation to protect social interests, and freedom to allow individual commerce, and that is ok, society should always reevaluate its structure as should any organization. I am merely reacting against the impulse to eliminate ALL regulations or say that business models that ignore relevant regulations are valid and superior.

For the record, I am actually a big fan of AirBnB, and use it regularly. I support their mission, I just think we have to be honest about the sources of their success, a part of which is a unique, better product, but a part of which is due to regulatory arbitrage. If we are not honest, we cant learn from what they have done and replicate it in other sectors. If my company takes the same approach in health care, I would go to jail, so why should we encourage this mind set for others reading hacker news?

[baddox]

No, I think it's reasonable to look at who is benefited and harmed by a regulation. The morality of contract killing is probably not very controversial. The vast majority of people would oppose it even if no laws or government existed.

[digitaltrees]

I agree, my point is that it is a balance. My example is far to the extreme. And I concede that AirBnB has a reasonable argument that the regulations should apply to them since there are real, and important factual differences in the way they operate.

That being said, as you point out, we should look at the benefit and harm of a policy, if existing business are harmed that is a relevant factor. I think it is reasonable, that has a general and universal rule, companies should operate under the same set of rules. The difficulty is that AirBnB, may not fit into existing categories of an industry and regulatory framework. So how do we determine which set of rules to apply, or whether any should? How do we determine what a company is doing that is subject to regulation?

Perhaps a good starting point is to look and the product/service and customer segment. Thus, where two companies are providing an interchangeable good/service, to the same customer segment, they seem to be direct competitors and as such, I think it is reasonable to apply the same rules or we are allowing one party to benefit from regulatory arbitrage.

[eloff]

Slippery-slope fallacy. Revising regulation to strike a balance between no regulation and existing regulations to allow services like AirBnB and Uber does not have a causative link to creating a contract-for-hire market for killers...

[digitaltrees]

I am pushing back against the slippery slope that all regulation is bad, or rather, that AirBnB should be allowed to ignore regulation. I am trying to demonstrate, that in principal, at least one regulation would be obviously appropriate. If we agree on that, then we can get into the process of evaluating which regulations are efficient, acceptable and balance the competing interests of maximizing utility, and promoting social good.

[eloff]

I think few would take the position that all regulations are bad, or that Silicon Valley companies should be able to ignore regulations. However, regulations need to change with the times and the technology, and this is one case where they haven't caught up. The regulations are serving to protect special interests, defeating the natural efficiency of the free market. They also serve some use, in terms of safety standards, mandating accessibility for people with disabilities, etc. Clearly they need to be revised and improved, but I don't have a lot of confidence in the political environment in the US that they will bring sanity to the situation anytime soon.