[jmckib]

That's not quite right. Airbnb may not set the price of accommodations directly, but their cut does influence the prices that its providers are able to charge. A competitor who takes a smaller cut will be able to have cheaper accomodations in their network, yet Airbnb is still a monopoly.

Here's another way of thinking about the difference between Airbnb and Uber. Let's say you are building an Airbnb competitor, and you found a way to attract 25% of Airbnb's providers to your service, likely by taking a smaller cut. That's still not good enough, because users will overwhelmingly prefer the service with the majority of providers, even if yours is a little cheaper. You die and Airbnb returns to dominance.

Contrast the situation with building an Uber competitor. To compete with Uber, all you need is some minimum number of drivers to be able to provide service to your initial users, and this is relatively easy because drivers can quickly switch between networks. The users do not care if you only employ 25% of the drivers, since that's still enough to provide good service. Make your service cheap and the users will flock to you, so now you can compete with Uber on price.

[abalone]

> The users do not care if you only employ 25% of the drivers, since that's still enough to provide good service

I question that assumption. Once one service reaches a tipping point it may be able to deliver a standard of service that will be very hard for upstarts to match. As an illustration, if Uber wins we may come to expect rides within 1-2 min anywhere in the city and to commonly match riders on Uberpool. Maybe 25% gets you there but at that scale 25% could mean hundreds of active drivers which is very expensive to muster with driver incentives. Also it will be easy for Uber to run promotions to starve competitors of their sole benefit, lower prices, until they run out of capital. That threat will discourage investors.

This is why they are fighting so hard right now. It's winner take all.

[jmckib]

You bring up good points, but I still think 25% of drivers (or even fewer) would be enough to compete with Uber, and here's why. If you've got a new startup and you want to match Uber's response time, you don't need to have nearly as many drivers as Uber, because you will initially be be serving a small number of customers in a geographically restricted area (if you're smart). Your first customers may actually get better response times than Uber, merely by having a higher initial ratio of drivers to riders. So once you've got that toehold, you can grow your service gradually, while maintaining the same response times that Uber does.

It's true that Uber could try to run promotions to starve competitors, but could Uber keep this up forever when it's so easy to compete? They have deep pockets, but not infinitely deep.

EDIT:

On second thought, your point about Uberpool is more compelling. Whoever has the higher density of riders in a given area will be able to do pooling better (although with diminishing returns as density increases past a certain point), and this could be hard for a newcomer to match. On the other hand, if you can reach that threshold by competing on non-pooled service, you may be able to roll out a competing pooling service later. It seems more surmountable than competing with Airbnb, because you could start by targeting a small geographic area, but I can see this driving some of Uber and Lyft's valuation.

Thankfully, newcomers will always be able to compete on price with regular (non-pooled) taxi service, so we can expect those prices to stay low, effectively setting a ceiling on pooling prices.