Wednesday, May 31, 2017

Uber, But For Journalism

Uber’s potential aspirations toward monopoly are a sensitive matter — in discussing how Uber Pool became more efficient the more people used it, McClendon referred to Uber’s ideal state as a “monopoly,” before correcting himself to call it “not a monopoly, but a heavily used service” — and while every company dreams of owning its entire market, the question of whether Uber can do so has become murky. One Uber investor told me he no longer sees ride-hailing as winner-take-all but didn’t want to speak for the company; when I put the question to Rachel Holt, Uber’s head of North American operations, she ducked it by praising the value of competition and saying she didn’t have a crystal ball.

Recent events have made a monopoly harder to imagine, to say nothing of how regulators might react. While Uber said its business in the United States was briefly profitable early last year, the company had been forced back into the red by Lyft, which had secured a new round of venture funding and begun offering more subsidies of its own to attract drivers and riders. Uber’s woeful early 2017 had also helped Lyft, which saw ridership increase 137 percent compared to the year prior. And while so far Lyft remains content to focus on the U.S., Uber’s ambitions for a global reach have added further costs. It is now in 75 countries, and faces an array of regional and local operators in each market. Its most formidable rival may actually be Didi Chuxing, a Chinese company that has already clocked more rides than Uber and recently raised $5.5 billion to help it compete in new markets. Uber spent two years, and $2 billion, trying to break into the Chinese market but eventually called a truce last year and agreed to sell its Chinese business to Didi in exchange for a stake in the company.

tl;dr Uber's fortunes depend on it being a monopoly (multiple local monopolies), which it has no realistic path to achieving.

Which brings me back to my original point, made years ago, that whatever the problem with local cab regulation, there is a reason the market depends on rate regulation and supply restriction...