4 ms·

They are very close to being a monopoly in the US, and are certainly a duopoly. Predatory pricing for a decade to establish market share, and then raising price

They are very close to being a monopoly in the US, and are certainly a duopoly. Predatory pricing for a decade to establish market share, and then raising prices once in duopoly status, would be a slamdunk antitrust case. That's the legal reality. Plus the political one- the average Uber customer is middle to upper middle class in an urban area- i.e., the types of people that politicians actually listen to. Politically sympathetic, vote in very large numbers, have an outsized voice in the media, etc. Every media outlet in America would cover the price increase nonstop. If raising prices didn't result in an antitrust suit the very next day, I will eat my hat

dbt00 5y ago
The market is not "ride hailing apps", it is personal transportation. Depending on where you live, the competition is trains, busses, biking, walking, company shuttles, or even moving closer to where you want to be. If the cost of an Uber from the airport is too expensive, people won't just take cabs, they could also park in long term parking or have a friend drop them off instead.
neonate 5y ago
I hear you, but that's also already a different argument involving complex externalities. I'm just asking why a better service with better tech* than taxis can't ever make money, when taxis do make money. * I know not everyone agrees with this, but enough people do that it's clearer to put the argument this way.
- hash872 5y ago
  I don't see what's the complex externality here- they can't raise prices significantly because they're legally prevented from doing so. 'The people with the guns & the legal monopoly on force forbid it' is pretty simple. To my understanding the only people making non-poverty wages in the taxi business are owners who purchased 'medallions' decades ago- aka another governmental licensing restriction. I believe they frequently lease out the cars to drivers who make minimum wage or less. I'm not sure an individual taxi is necessarily profitable on a per-car basis
- webmaven 5y ago
  A better service with better tech than taxis can make money. The market for the necessary backend services ends up looking like some hybrid of the market for web hosting and the market for geospatial data and services hosting: Mostly open source software. Competition is largely on price. Plenty of small entrants into the market, fewer big providers, lots of resellers. Many of the 'apps' are white-label skins on the necessary backend services, others are self-hosting the infra. Some local governments operate these services as utilities. So, the software opportunity looks a lot like Automattic (the makers of Wordpress software and operators of the wordpress.com hosting service), which is a privately held company and valued at $3B.
vineyardmike 5y ago
> would be a slamdunk antitrust case If a not-profitable company is raising prices to not go out of business then idk how well that would play out in courts. Would a court force uber to go out of business instead of raising prices?
- dragonwriter 5y ago
  The price raise would just be part of the evidence that the earlier low prices were anticompetitive dumping to monopolize and maintain a monopoly on the market, the remedy for illegally protecting the monopoly would probably not be prohibition on raising rates, though. Breakup or other remedies would be possible.

dbt00 5y ago

The market is not "ride hailing apps", it is personal transportation. Depending on where you live, the competition is trains, busses, biking, walking, company shuttles, or even moving closer to where you want to be. If the cost of an Uber from the airport is too expensive, people won't just take cabs, they could also park in long term parking or have a friend drop them off instead.

neonate 5y ago

I hear you, but that's also already a different argument involving complex externalities. I'm just asking why a better service with better tech* than taxis can't ever make money, when taxis do make money. * I know not everyone agrees with this, but enough people do that it's clearer to put the argument this way.

hash872 5y ago
I don't see what's the complex externality here- they can't raise prices significantly because they're legally prevented from doing so. 'The people with the guns & the legal monopoly on force forbid it' is pretty simple. To my understanding the only people making non-poverty wages in the taxi business are owners who purchased 'medallions' decades ago- aka another governmental licensing restriction. I believe they frequently lease out the cars to drivers who make minimum wage or less. I'm not sure an individual taxi is necessarily profitable on a per-car basis
webmaven 5y ago
A better service with better tech than taxis can make money. The market for the necessary backend services ends up looking like some hybrid of the market for web hosting and the market for geospatial data and services hosting: Mostly open source software. Competition is largely on price. Plenty of small entrants into the market, fewer big providers, lots of resellers. Many of the 'apps' are white-label skins on the necessary backend services, others are self-hosting the infra. Some local governments operate these services as utilities. So, the software opportunity looks a lot like Automattic (the makers of Wordpress software and operators of the wordpress.com hosting service), which is a privately held company and valued at $3B.

vineyardmike 5y ago

> would be a slamdunk antitrust case If a not-profitable company is raising prices to not go out of business then idk how well that would play out in courts. Would a court force uber to go out of business instead of raising prices?

dragonwriter 5y ago
The price raise would just be part of the evidence that the earlier low prices were anticompetitive dumping to monopolize and maintain a monopoly on the market, the remedy for illegally protecting the monopoly would probably not be prohibition on raising rates, though. Breakup or other remedies would be possible.