[mamon]

And when they do raise prices another competitor with loads of VC money will appear, trying to "disrupt" them.

The barrier to entry in ride sharing business is so low it's almost non-existent, which makes the whole strategy pointless, unless they can lobby in Congress for some regulatory framework that would make starting a new ride-sharing business harder.

[zelos]

>unless they can lobby in Congress for some regulatory framework that would make starting a new ride-sharing business harder.

Which would presumably mean they've spent billions to go round and end up exactly where we started? Which is presumably what will happen with a lot of the 'disruptive' companies once public opinion and regulation catches up with them.

[Applejinx]

You can say that, but then where is another Amazon? People like to say these things are basically zero-friction and completely liquid, but it's not true. If you can kill all the taxis and discourage private vehicle ownership because you control 'Ubering', there will be a profound cultural habit to use YOU, 'Uber', rather than some slightly cheaper replacement.

I don't know if it's worth as many billions as it's cost so far, but it's not nothing. This is being done because a monopoly of this type is NOT so easily busted by some bright spark 'disruptor'. If nothing else, you can spend a few more billions buying whispering campaigns suggesting that the new 'disruptor' is unsafe or tainted, or simply attack them more directly, terrorize their drivers, whatever.

Even without such black tactics the notion of frictionless liquidity in market dynamics is foolish. It doesn't work that way.

[zhdc1]

That's like saying Facebook shouldn't be profitable because anyone can come up with a social media platform.

There are user costs to switching platforms, even if the platform is a ride sharing app. I get that the friction is less than something like Facebook, but an amount much, much smaller than 23 billion would have been enough to 1.) have the best app on the market and 2.) advertise/discount where necessary to maintain some market share.

If your customers have an unsustainable business model and you have favorable unit economics and a market leading position, you can quite literally sit on your cash flow (good unit economics and low overhead lets you survive market share losses) and wait until everyone else goes out of business.

[mamon]

Facebook has network effects: you use it because all of your friends are using it, making a cost of switching high. In the ride sharing business however, there is zero consumer loyalty - installing a new app in your phone takes one minute. Riders can have multiple apps and order ride in the one that offers best prices, and all the drivers will probably be using multiple apps already.

Also: you don't need to have "the best app in the market", just a reasonably good one. Advertising cost is more of the issue, but you can do that by starting in one local market, get some market share and use it to attract more VC capital.

[braythwayt]

What would we call such a regulatory framework? How ‘bout an old-timey phrase, like “Taxi Legislation?”