[CPLX]

Right. But it's the second half of the business strategy that I outlined above that's key to the discussion, ie the idea that paying billions of dollars for market share in this field makes sense. That's literally crazy, the network effect and lock-in at scale is really modest at best.

Sure the more cars you have the better the service can be, but it's trivially easy for a competitor to come along at any time and attack your most profitable market segment in a given city, and trivially easy for any customer to switch as easily as clicking on a different app and glancing at the estimated time and price. That's going to be true forever, this isn't a market that will ever have a defensible monopoly position.

Investing some amount to hedge in self-driving cars could conceivably be defensible, but looking at what's going on it feels like that's more of an rationalization for their present behavior.

They've been lighting money on fire subsidizing rides for a few years, and have hunted around for a plausible excuse. One is the "pool" functions, as that has a slightly more plausible network effect story, and the other is self-driving cars.

Both appear to be post-hoc rationalizations designed to provide some plausible story for why they need to borrow another couple billion dollars.

[TheOtherHobbes]

I wouldn't say it's trivial for a competitor to take over.

The Uber app is still best-in-class, and all my friends now say "Get an uber" instead of "Get a cab" because the UX is so much smoother.

Generally it's extremely difficult to dislodge an incumbent from a market slot. Newcomers can only compete on price, UX, and brand recognition. Ideally all three need to be significantly better than the incumbent to have a hope of taking over. Without all three the best a newcomer can hope for is a small slice of the pie.

So market share definitely has value in the abstract. Unfortunately in Uber's case it has negative economic value because of the costs/subsidies.

Then again I suppose it's possible Uber has always been a cunning plot to take VC money and spend it on subsidised transport. If so, it's definitely been a success - for now, at least.

[ExactoKnight]

What you are saying is right about Uber's current business. But that is not true for self-driving cars.

The infrastructure costs of deploying a fleet of cars to compete with Uber if they gain market share will be massive, all but assuring they will hold a monopoly position for years unless a decentralized competitor could actually become reliable quickly (I doubt it).