Running at financial loss just to drive prices down so you can kill competition is at least unethical in my book. Also I believe it is illegal, for good reasons, in some countries.
It's idiotic to allow these unicorns to destroy existing businesses only to screw customers later on. They are not moving the world forward in any manner. It is just a power grab.
At best we will end up replacing many small businesses with behemoths with a virtually limitless lobbying powers.
I don't believe such strategy can work. Screwing you customers is an extremely bad business practice, and it only works if your competition faces very high entry barriers or prohibited altogether, e.g. by law or regulation. Otherwise you'd either have to lower your prices each time new startup comes around, or you quickly get your market share eaten, as it happens now to taxi monopoly.
> At best we will end up replacing many small businesses
Taxi medallions are not controlled by small businesses. With their prices (before Uber), they can't be. Small business doesn't have that kind of money.
1. Once they are big enough they can sell at loss or razor thin margins at the expense of employees(see Amazon) which in itself becomes a barrier to entrry. Most of the new small competition will die out during this phase of being discovered by customers or will face a constant cash flow crisis since incumbent can wait them out.
2. Do not underestimate the power of inertia. Let's take an example of Microsoft. For how many years IE was left to rot once they destroyed Mozilla?
Did Microsoft go out of business or fail in anyways? I guess no and don't forget it took another behemoth Google to fight the it out in the form of first supporting Mozilla and then coming up with their own browser.
> Taxi medallions are not controlled by small businesses. With their prices (before Uber), they can't be. Small business doesn't have that kind of money.
Probably they are their own local monopolies not but how replacing them with with one big all encompassing entity is a solution?
This is an anecdote but it happened to me few months back. I ordered an Uber but when it didn't arrive in time, I canceled it. Next time when I took Uber they just added a charge to my current bill silently without any intimation. I had to call them and go though half an hour of explaining. After that only they agreed to adjust the amount in my next bill. There was no option to get my cash back if I wanted my money. In my view this is no different than taxi nexus and once they are the o
> At best we will end up replacing many small businesses with behemoths with a virtually limitless lobbying powers.
Small business has had a hard time for a while now, suffering under corporate business models, greatly helped by the government. I always seem to come back to banks as examples, but they are a good example. These financial institutions that got bailed out... if they weren't bailed out, if the government allowed the market to correct itself and let those businesses fail (these behemoths), it would facilitate or at least allow for the rise of many small businesses to replace them.
That's just one example of how the current government/corporate business model hurts small business. How many small businesses were bailed out? Trillions spent to save the institutions that created the crisis in the first place.
> The Fair Labor Standards Act does not apply the minimum wage payment requirement to independent contractors. However, merely classifying a person as a contractor instead of an employee does not automatically keep the worker from being considered an employee entitled to minimum wage. Since improperly classifying a worker as a contractor carries with it legal repercussions, you must fully examine the work a person will take on for your company and compare it to labor standards.
There are a lot of talk that Trump is going to break up some of the Silicon Valley companies up. Especially the ones who don't care about American jobs.
Just my opinion, but these are two groups that appear to have contributed less to Trump's success than to previous Republican candidates' (in the case of mainstream Republican politicians - actively attempting to thwart him). I think he is actually less beholden to these groups than past Republican presidents were.
It is certainly not illegal. That would only happen in an extremely regulated market.
Which ethical principle does it violate?
You're still missing (or strawmanning) the order of the events parent is referring to.
An analogy would be closer to the US deciding headlights were a required safety feature. Then at some point after that Chrysler realizes they can duct tape glow sticks to the bonnet and cut costs.
Doing so is illegal, they knew it would be illegal, and they still chose to make it their business model.
Whether the laws being broken serve a societal purpose is another question, but one that can't be hand waived away by saying "Some laws are bad. AirBnB has legal troubles. Therefore the laws AirBnB is breaking are bad."
Forcing the law to change and catch up with the times can therefore be seen as an important public service.
I think the exasperation I (and others) seem to have with AirBnB/Uber/their supporters' sometimes-arguments are that they skip right over the "changing the law" piece. That's a pain in the ass and a lot of drudgery to be sure. But personally, I prefer to live in a society with a moderate amount of respect for the rule of all laws. Because the alternative of getting into a front-on collision at night with an unlit car sucks.
I dont think were gonna get rid of that in the next 4 years.
I absolutely agree. I'm no fan of Uber or Airbnb but I still side with them on a lot of issues (except Uber or airbnb requiring you to accept any and every customer in the name of anti discrimination).
I reject the idea that traditional taxis are safer than Uber. I reject the idea that Airbnb makes our communities less secure. My understanding of Airbnb is bringing someone to share my house where they have their own room but I'm still in the building. YMMV when it comes to most Airbnb use cases where the host is in a different state and uses Airbnb full time.
The reason I support these companies even though I don't like them is that I feel helpless against the regulatory capture. Taxi service doesn't exist to promote employment of taxi drivers. I think the medallion holders should ask TLC for their money back they paid for their medallions. Screw this whole charade about employment. If the only way to fight against regulatory capture is big companies breaking laws, I fully support big companies breaking those stupid laws. If I were in a jury about any such case, I'd likely vote to acquit.
One of the bigger reasons for medallions is congestion control. For-hire private transportation provides a financial incentive to have more cars on the road. This system will only begin to self-correct after the point of gridlock (assuming that taxis lose money while in gridlock), or not at all (if they get paid to sit in traffic). If that sounds like a future you want, you can go down to Panama and enjoy it any time. If it's all the same to you though I'd prefer not to import third-world living conditions.
It's meant to avoid overuse of some shared facilities (loading dock, etc), having to reexplain the rules we all agreed on every other day, improve the sense of community, and all around make it nice for everyone to enjoy their apartment and live with each other.
If they go out and airbnb their unit out, it's not the hotel industry they're hurting. It's their neighbors, community, and they're breaching rules they specifically agreed to.
> So borrowing money from investors to compete with somebody is now a despicable thing, maybe even a crime?
That's considered economic dumping and is likely a net negative in the end. They ruin the competition by operating at a loss and then collect rent when they are the only ones left.
Business models which are based on undercutting the competition by ignoring the regulation concerned with safety of end user.
The analogy in your case would be GM sponsoring a law that says that if you want to build cars, you have to e.g. include seatbelts or not pump carbon monoxide into the air. That is a perfectly good law for GM to be sponsoring, even if it does inhibit competition.
http://reason.com/blog/2016/10/31/hotel-workers-union-gave-1...
http://reason.com/blog/2016/11/04/hotel-exec-celebrates-new-...
It's not about safety or interests of anybody else, it's about who the money goes to.
(Can we use Airbnb celebrating the other side as evidence that Airbnb's preferred laws don't serve visitors, they serve the VC lobby?)
On the contrary - Uber likes to say that it's fighting against the unjust laws in London that require drivers to take an obsolete test of all roads in the city.
In reality, they would have been exempt from that law as long as they provided fixed price quotes in advance. (Uber provides "estimates", but not fixed quotes).
They actively chose to structure their business model this way because providing estimates instead of fixed quotes allows for better customer acquisition, and they'd rather compete against medallion cars because it's an easier market to undercut if you have the VC cash to spend tens of millions in lobbying and lawyer fees just in that one city (as they have).
London minicabs are terrible compared to Uber (unreliable, unavailable, no QA), while black cabs are absurdly overpriced. There's an obvious gap in the middle which is caused by protectionist legislation.
To compete "in all cases", no. To compete against mom and pops -- that's a different matter altogether.
maybe even a crime?
That's not what the commenter was saying.
If you have any doubts about this, ask a medallion holder how they go into the business (which I've done a fair amount of in various cities, in the past couple of years since Uber/Lyft got big). In effect a "medallion" is a lot like a permit to park your food truck in a certain place, or a lease on a corner store. And a lot of these people either invest their life savings (or sometimes the life savings of extended family members), and/or go very seriously into debt in order to purchase one of these "permits". And whose nest eggs Uber et al would very much like to "disrupt", at massive scale (literally in all corners of the globe) in order to validate their Weltanschaung (and of course, get stinking rich).
Yes I know these services also bring (significantly) greater efficiency and experience, and perhaps better working conditions and financial security -- for some current medallion holders.
But it would be naive to suppose that all of them stand to benefit; most likely there will be many losers as well -- by which I mean: bankrupted, in middle age, with a laughable pension and no savings -- before the dust settles.
This is a very disingenuous statement, because it is illegal only because it's made illegal to kill the service model they are using. It's like GM sponsoring a law banning Toyotas and then saying - well, look at those criminals - they are making illegal stuff! How shameful of them! No, it's shameful to use the law as a club to bash competition and prevent innovation instead of what it was meant to - to protect people from harm.
Yeah, no.
Various jurisdictions may be tightening up laws, and the original intent of AirBnB may not have been anything illegal, but the way it has developed it does promote activities that were never legal to begin with in most jurisdictions. And renting your home out via AirBnB can void your homeowner's insurance because it is commercial use of a residential property. Many people do not realize this and do not notify their insurance company and only find it out if an AirBnB tenant damages something, they try to file a claim and get told "You aren't covered for that and, now, you aren't covered at all."
I have not paid real close attention, but my understanding is that this started as more like a paid form of couch surfing or a means to find a short term roommate and then someone eventually asked "Can I just list my entire property for rent, rather than just a portion of it?" and now that format is most of their listings.
So, as I understand it, they kind of slippery sloped their way into their current model. But their current model is basically illegal in most jurisdictions and always has been.
Some jurisdictions may be tightening up laws to make it easier to combat and perhaps that is the wrong way to handle this because it fosters misconceptions of the type you have. But residential property was never meant to be treated like a hotel and the fact that the internet makes it possible to do so in ways that were never before possible does not change the fact that rules concerning residential property is intentionally different from rules for commercial property and always have been.
I generally try to stay out of discussions about AirBnB. I don't think the founders are nefarious people who intentionally tried to do anything bad. I think this very much was a case of slippery slope. Like a lot of slippery slopes, it started out as not necessarily a bad thing but has gradually turned into something seriously problematic.
As they say: The devil is in the details. Law is very often all about insidious details. When the people who run AirBnB agreed to something that was not part of their original vision and then that happened to work to rake in the dough, well, they are responsible for what they agreed to without apparently really thinking it through carefully enough. I get the appeal of that, but it doesn't make it right that they were just trying to make money and not intentionally trying to fuck up entire cities. I am totally fine with the existing war on AirBnB.
Rather than acting all surprised and like cities are being unreasonable, maybe they should rethink their business model and stop behaving like Theranos and basically demanding that the world rise up and drag them out of there kicking and screaming because the allure of the all important goddamn dollar is too fucking strong for them to care about what their business model does to the fabric of entire cities. "Not their problem -- LA LA LA NOT LISTENING" all the way to the bank.
This is a very disingenuous statement, because it is illegal only because it's made illegal to kill the service model they are using. It's like GM sponsoring a law banning Toyotas and then saying - well, look at those criminals - they are making illegal stuff! How shameful of them! No, it's shameful to use the law as a club to bash competition and prevent innovation instead of what it was meant to - to protect people from harm.
> Losing crazy amounts of VC cash to compete against traditional companies that must be cashflow positive.
So borrowing money from investors to compete with somebody is now a despicable thing, maybe even a crime?
> It's not a level playing field.
Sure it is. Level playing field does not mean everybody has the same sum of money.
> Uber is devaluing the medallions they've invested in.
The value of medallions was created by artificially choking the market until what was supposed to be simple permit issue to open a business now is a million-dollar investment way out of the reach of a common person. On the way creating a severe shortage in services and severe price distortions, since drivers now have to cover the costs of there million-dollar medallions.
> Is this really how we want the world to see us?
As people trying new things instead of just doing what always been done and letting incumbent interests tell us they are there for our own good and don't dare to question them? Sure thing!