20 ms·

I'm no economics expert, but if Uber loses money on subsidiaries, that's dumping(1) against local Taxi companies and these companies actually might have some va

• legitster 10y ago
  Dumping is really only applicable if they are undercutting their prices in specific regions. If I am under-charging across my entire lineup, that's just on me.
  • bryanlarsen 10y ago
    Which they absolutely do. AFAICT, Uber doesn't subsidize rides in Europe because predatory pricing is illegal there. But they do in new markets in the US and used to subsidize heavily in China, which opens them up to charges of dumping, it seems to me.
    • an_account 10y ago
      Dumping is for products that are being exported. Uber isn't exporting anything.
    • 67726e 10y ago
      > because predatory pricing is illegal there Legality hasn't exactly been a problem to Uber's expansion. Why would this particular situation be different?
      • DavidHm 10y ago
        There's a bit of a difference on which government body enforces which rule. In quite a few countries, taxi rules are governed by cities - so the municipality government is the enemy. Anti-monopoly/ predatory pricing rules are at least national level - and if you are unlucky you can go against the EU itself, which historically has not been afraid to slap companies with gargantuan fines that would never be allowed from the pro-business USA SC.
        • Aissen 10y ago
          You might want to read this: http://blogs.wsj.com/moneybeat/2014/06/23/a-list-of-the-biggest-bank-settlements/ http://blogs.wsj.com/moneybeat/2014/06/23/a-list-of-the-bigg... This is well above any fine from the EU.
      • pavlov 10y ago
        Could be because the European Commission is known for giving multi-billion-dollar fines to foreign corporations for anticompetitive behaviour? Uber might feel that the risk-reward ratio is not good enough here to be acting in bad faith.
        • masklinn 10y ago
          According to the GP they specifically don't do that in the EU.
      • legulere 10y ago
        Uber has lots of problems with legality in Europe. In Germany it's basically nonexistent. Note that the regulation for taxis in Germany really makes sense (for instance background checks for drivers).
  • chinathrow 10y ago
    Which they do as read on another thread - 18$ for a 45min ride in SF, the driver gets $50.
    • ryanlol 10y ago
      It's still worth considering that the passenger risks having to share the car, so the lower price is most certainly justified. I doubt Uber is trying to run those cars with only one passenger at a time.
      • dilap 10y ago
        even with a full car they're still losing a lot of $.
        • ryanlol 10y ago
          I don't know what's the definition of "full" here, but I'd guess they leave the middle back seat empty. 3*18 is still 54 so there's clearly some profit to be made.
          • oceanofsolaris 10y ago
            But only if they are fully occupied > 90% of all time (which is IMHO not really feasible).
          • biggc 10y ago
            Nope, I've had the unpleasant experience of a full pool a few times, they'll fill the back seat if they can.
          • dilap 10y ago
            oh, that's a good point -- i was forgetting they can pair up 4 different paying customers. i think it must be rare though -- i see full ubers and full lyfts fairly often, but i've only ever seen 2 couples (& it's only $1 more for a pair).
• funkyy 10y ago
  With all the shady tactics from Uber so far including lobbying etc. I think Taxi companies have no case here...
• tim333 10y ago
  Technically predatory pricing rather than dumping which is for products. Probably hard to do them in the US: >the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory. The Court requires plaintiffs to show a likelihood that the pricing practices will affect not only rivals but also competition in the market as a whole
  • lukeschlather 10y ago
    The two market leaders are losing money hand-over-fist in the hopes of becoming a monopoly. I'd say it's affected competition in the market as a whole. Heck, if you buy Uber's logic, they don't actually compete with Taxi companies. Lyft is their only serious competitor, and both of them are losing a ton of money (arguably, but I'd like to see a court weigh in) because of Uber's irresponsible behavior.
    • maxerickson 10y ago
      It depends on bit on whether you think a ridesharing brand is a defensible monopoly. Even if they figure out some onerous legal contract that forces drivers to work exclusively for Uber, other drivers will sign up for a company that charges consumers less and pays drivers more. They get praise for their logistics expertise, but advanced routefinding using digital maps is literally a commodity (you can pay ~$0 for a route from lots of companies).
      • ThrustVectoring 10y ago
        The brand is not the defensible monopoly. It's having a thick market. Drivers want to drive for Uber because they can expect to find riders, and riders want to order from Uber because they can expect to find drivers.
• karzeem 10y ago
  Genuine question: is it safe to assume that dumping is bad for consumers? It's clearly bad for competitors, but it's basically like handing out free money to consumers. The concern is that once all the competitors die, the dumper will have a monopoly and jack prices up. But empirically, what are some examples of that happening? With few exceptions, it's only possible for monopolies to sustain above-market prices when laws block new competitors from starting up.
  • sdenton4 10y ago
    Look towards video rental back in the nineties. Blockbuster would move into a town, give very cheap rentals until the moon and pop stores went under, and then raise prices.
    • Merem 10y ago
      In a town here, we had basically the same with a doner kebab shop. The chain moved in, priced the doner at 1.20€ (local was 2.20€ which was already cheap), killed the competition after a few months and then raised prices to 3.50€.
    • exclusiv 10y ago
      Yeah video games were especially bad. I think they got up towards $8 a rental before they went under.
    • p4wnc6 10y ago
      The interesting thing in the case of Uber/Lyft/etc. is that the end goal would almost have to be a situation in which on-demand ride sharing applications became nearly the sole mode of transit in the regions of interest. Otherwise, literally as soon as you drive out all the other transit competitors (taxi companies, other ride-sharing services, whatever) and begin to apply monopolistic prices, there will be a huge flood of lower-priced alternate options, like taxi companies popping up again. For me, this is what's so scary about Uber. It's not "disruption" as many people seem to claim. It's engineered regulatory capture. The goal isn't to disrupt a market, but rather to wipe it out and have the financial and political backing to secure some sort of regulatory environment in which lower-priced options cannot emerge after the VC-subsidy phase ends and the monopolistic price increases begin. It's double sad that as the sort of flagship start-up of the era, Uber leads the way in deplorable executive behavior, shady business practices, and questionable labor policies ... and despite it, they've managed to win the PR war that has every naive tech youngster singing about how they are "disruptive" and singing how all criticisms against them are invalid because of precious, precious "disruption."
• URSpider94 10y ago
  There's a fine line between predatory pricing and "forward pricing." It's a very common, and valid, business practice to price a good or service at a level that will be profitable in the long term, rather than try to be marginally profitable on every single transaction. For example, on UberPOOL or LyftLine, the companies are betting that they can support the reduced pricing for shared rides when they get a large enough customer base. The only way to prove out that business model and grow the scale is to offer the discount pricing for those rides from Day 1. In my mind, the situation is a little more suspect if they are subsidizing standard rides in the market. However, at this point, there are two major competitors in almost every US market, Lyft and Uber, so they are making the market between them. Whether or not either of them is losing money, if they raised their prices at this point, they would suffer a precipitous drop in market share. Sooner or later, they'll find an equilibrium. Taxi companies can choose to ante up and participate in the market, or fold and get out -- that's how it goes. From a competitive standpoint, it takes two to tango, it doesn't take three.
  • 98239232 10y ago
    Would that mean that if two price-dumping companies collude, a third party cannot sue them -- because there is "competition"?
    • mikestew 10y ago
      Collusion's another thing all together, and not the thing you're replying to. Complicated, as always, but in short the scenario you describe might very well be illegal.
    • stale2002 10y ago
      Basically, yes. Anti monopoly laws are meant to protect consumers, NOT other businesses. It is very hard for a company to get in legal trouble for price dumping, because as it turns out, price dumping in many cases is freaking awesome for consumers.
    • dragonwriter 10y ago
      > Would that mean that if two price-dumping companies collude, a third party cannot sue them -- because there is "competition"? No, if they are actually colluding, that is an illegal combination in restraint of trade independent of whether that collusion involves dumping, and anti-trust law provides both private causes of action (for harmed competitors) and public causes of action (for the government) to address such collusion.
• macspoofing 10y ago
  I don't think ride-sharing companies and taxi companies are in the same market (kinda like cars and horse-drawn carriages aren't in the same market, even though the former killed the latter). Uber's losses don't stem from them trying to kill taxis, but rather from rapid expansion and intense competition from other ride-sharing services.
  • luka-birsa 10y ago
    I'd say that Uber is more a taxi company than a car sharing company as people buy dedicated cars to provide service and earn a living. I'd go as far as to say it's a first trully global Taxi company with a very good app and payment implementation. The whole car sharing is marketing bull, so that they can justify dodging regulation and dumping prices.
    • luka-birsa 10y ago
      I'd also add that the proof is in the whole "let's create autonomous cars and drive people around without drivers", where it's kinda obvious that it can't be a sharing economy if they provide the car and the driver is not needed.
    • stillworks 10y ago
      In my mind there isn't a clear view as to what Uber are. A driver does not make money if his Taxi is not running or it's running idle. What Uber are currently doing is at least trying to minimize idle times. Also, Uber win ultimately if all Taxi drivers in all the countries only affiliate with Uber (if Uber are so good at reducing their idle time) But then, there is the aspect of self driving taxis. In that case Uber will win if Uber are the only operator and no competition is EVER allowed... which seems to be very difficult in the longer run. Mass-transit solutions will be more efficient than transporting only a single individual or maybe 3 or 4 at the same time ? So Uber may be the cost-effective somewhat luxury transit providers ?
• legulere 10y ago
  You just found the idea behind disruption: Destroy all competitors by dumping. This is financed through investment and disregarding all regulation (who needs background checks for taxi drivers anyway?)
  • aaroninsf 10y ago
    This. AirBnB put about $10M in SF fighting regulation in the last election. Smart money. Their problem today is that despite their success in that round, the fiction that their business is about a 'share economy' is unraveling as details emerge from third parties on their actual revenue stream: https://fivethirtyeight.com/features/airbnb-probably-isnt-driving-rents-up-much-at-least-not-yet/ https://fivethirtyeight.com/features/airbnb-probably-isnt-dr... I look forward to regulation catching them.
  • KerrickStaley 10y ago
    Lyft and Uber both perform background checks on drivers. Lyft also has a mentorship program where new drivers are screened for safe driving, car quality/condition, and other criteria by an experienced driver.
    • legulere 10y ago
      http://www.fastcompany.com/3050145/fast-feed/ubers-background-checks-missed-murder-and-dui-convictions-prosecutors-say http://www.fastcompany.com/3050145/fast-feed/ubers-backgroun... Uber also fought against thorough background check legislation in texas if I remember correctly. There are tons of other regulatory issues like insurance.
      • biggc 10y ago
        Ridiculous! I pay a $1 "safe rides" fee every time I ride. Uber wouldn't lie to me about its purpose!
        • mahyarm 10y ago
          It's called a booking fee now. I think they called it safe rides because it included the cost of insurance & background checks. http://uberestimator.com/booking-fee http://uberestimator.com/booking-fee