Yeah, and I bet after Borders shuts down, you'll see Amazon raise book prices sky-high!

People always claim this will happen, and it never seems to. If Uber tripled prices, a competitor would start up to cut into their market share.

There are plenty of examples of individual companies (or groups of companies) getting too much monopolistic (or oligopolistic) power and doing just that or similar. You could look at at the Phoebus Cartel of lightbulb manufactures [1], the Bell System monopoly [2], or in transportation the GM Streetcar conspiracy [3].

Due to Uber's network effects you could say they'd have even greater power to change prices dramatically. Let's say Uber became the dominant transportation network in a particular geography and then trebled prices. Any new competitor has to both lure riders and drivers from Uber. Riders, sure they can be lured by cheaper travel but drivers want to earn the most money. Uber could simply double how much they paid drivers. All the existing drivers (and any new drivers) would rather work for Uber and get paid more. In fact they would have a vested interest in seeing the competitor fail.

1: https://en.wikipedia.org/wiki/Phoebus_cartel

2: https://en.wikipedia.org/wiki/Bell_System#Nationwide_monopol...

3: https://en.wikipedia.org/wiki/General_Motors_streetcar_consp...

Phoebus couldn't last, no free market cartel can.

Bell System ended up being heavily regulated, and it's service was second to none. It was nearly a natural monopoly because of the cost of running phone lines. If Uber ever became that, we could resolve any problems with regulation.

But in reality Uber can never become a natural monopoly, entry into their market is too easy and just gets easier over time as costs decline for systems development/operation.

What will happen if they succeed is that Uber will become a valuable brand, people will prefer it, and other competitors will be forced to compete solely on price. So far brand building is something Uber is struggling with.

> Bell System ended up being heavily regulated, and it's service was second to none. It was nearly a natural monopoly because of the cost of running phone lines. If Uber ever became that, we could resolve any problems with regulation.

I think it's unlikely that the current political climate will allow such problems to be solved with regulation.

At this exact moment? No. But if Uber was really gouging people Trump would be one of the first to try to make political capital from regulating them.

Politics is politics. I was just re-listening to Dan Carlin's podcast series on the fall of Rome. He starts with the Graccus brothers, who were populists. Rome had an elitist power structure, basically the founding families controlled the senate, with the Equestrians and Plebes below them (and slaves below that).

The Graccus brothers got themselves elected Tribunes, which were roles intended to check the power of the senate, and took those roles to push forward land and other reforms to check the power of the senate and give things to the middle class and poor (some would say to buy the mob).

To stop this, the Senate at one point recruited their own Tribune candidate, and he didn't promise to rollback the Graccus reforms, in fact he did the opposite. Instead of giving away land for cheap prices to the Plebes, he offered them free land. He offered even more bread subsidies, and instead of the state paying for a foreign colony for the plebes, he offered to pay for 12 of them. And he got elected to replace Gaius Gracchus.

All politicians are sensitive to where the wind is blowing and most try to take advantage from it.

Don't forget cable providers.

> Yeah, and I bet after Borders shuts down, you'll see Amazon raise book prices sky-high!

There's some truth to that: whenever I bother to check I find that Amazon is no longer price-competitive with brick-and-mortar.

> If Uber tripled prices, a competitor would start up to cut into their market share.

...unless there's no actual profit at anything less than 3x the current prices. Isn't Uber running on a VC subsidy right now?

To be fair, Uber has already been profitable in some markets.

3x the current prices would put us at roughly what taking the cab looked at before Uber cost-wise.

VCs wont pay for rides forever.

VCs are just paying for rides until self-driving cars get to the point that drivers are no longer needed.

I'm not concerned with the price of rides increasing, I'm concerned with the unemployment our country is going to get punched in the face with. Between cab drivers and OTR (truckers), we're going to have a MUCH bigger problem on our hands than we've seen since Detroit collapsed (which was arguably less of an issue since it occurred over a longer period of time).

VCs are needed until a self-driving car can pick an elderly passenger at the airport and help them with their baggage when they get home.

Uber will run out of money long before we have self-driving cars.

There have been services to help elderly people get their bags in and out of the car at the airport for literally decades.

As for "at their home" - if you think that the cross section of elderly people who:

Can't lift their bag into a car.

Travel frequently.

Have no friends or family to help.

Have no neighbors to help.

Don't live in assisted living.

Is enough to sustain the industry, I think you're in for a rude awakening.

> VCs are needed until a self-driving car can pick an elderly passenger at the airport and help them with their baggage when they get home.

This is a very good point. Also consider that many more people need help with groceries than with luggage.

Just call the "Human Uber" service instead, which will come with a pair of hands. I doubt that's more than 5% of their market, so it justifies having a differentiated price for the extra help you get.

I can't see why they're can't be a uber human driver option or you can simply ask from a cart boy to help with groceries.

Heck, with amazon groceries and other similar services, why do they even need to go to the store?

The people will just move back to the forests and the mountains. The rivers will be their roads, paths their sidewalks, trees their grocery stores, and grubs their food.

With Uber, Lyft, and other ride-sharing services, I would say there is more employed in the "move people from A to B" business now than ever before. The mobile apps increased the supply of drivers and captured the market demand for convenient and cheaper rides.

Self-driving would take away a big chunk of that market, but estimates vary on when that becomes a reality. With every major technology improvement, there were massive employment and social shifts. Wars and revolutions were often side effects. However, I don't think the percentage of the population engaged in the taxicab and trucking industries are enough to destabilize society. By its nature, the employees in that business are often transitory. Perhaps there will be legislation to force self-driving vehicles such as taxicabs and commercial trucks to keep a human "driver" to supervise and assist when the vehicle gets into situations outside of its programming.

True, but in cities with medallions supply was effectively restricted which probably had an influence on prices. That probably wont happen under a rideshare system.

I guess you have never rode Uber during "surge" times. Sometimes the pricing becomes insane.

But he isn't wrong. Uber will raise prices after subsidy stops.

I doubt Uber's US market is subsidized much, if at all. The financial analysis that's been done can't break down the cost of investment in international markets and new businesses from actual operating costs in the US ride share market.

Uber's service costs pennies per ride to provide, drivers pay them dollars per ride to participate. There is almost no chance Uber can't be profitable at current prices. The only question is whether prices need to rise to ensure a decent supply of drivers.

Selling books and operating taxis are a very different market.

I'm pretty sure Lyft, which is just about as good as Uber for taking ordinary trips, will moderate that. Lyft isn't going anywhere; their cash reserves are large.

Also public transit, car rentals, etc.

Public transit and car rentals are a poor substitute for a taxi service.

I must be weird. I travel over 100 days a year. I do a lot of walking, sometimes rent cars, take public transportation, etc. I take taxis etc. relatively rarely.

Each of those options is perfectly fine for transportation if you planned and or intended to use them, what I mean is that whenever I've used a taxi or taxi-like service, car rental and/or public transportation would not have been a valid substitute or even possible.

Car rental because you have to pick up the car and later drop it off and the costs are significantly higher than a taxi, and public transportation because it's slower, more crowded (therefore more difficult with luggage) and doesn't always go directly where you want to go.

On a city-wide scale you can't expect car rentals and public transportation to be a valid replacement for a taxi/taxi-like service.

Have you been to Europe? I live in Poland and use public transportation as much as Uber - being able to afford both just as easily.

I have lived in Europe, although not Poland, but my point is not that public transportation is not useful, just that it's not always a suitable replacement for a taxi.

Taxi service and rental cars are a poor substitute for public transit.

I love that I live in one of the few cities with a train that leaves directly from the airport.

Manchester, UK? Helsinki, Finland? Tokyo, Japan?

(I now wonder how many others I don't know about from personal experience!)

Chicago

Atlanta

and who do you think is paying for your cheap Lyft trips? Does not matter which ride sharing company you use right now. It is all VC money. Stop the whole Lyft has higher ethical moral ground BS. It is all about capitalism and supply demand.

Supposedly Lyft is on its way to profitability [1]. Twitter is still not yet profitable, but it shouldn't stop me from using the service if I find it useful.

> and who do you think is paying for your cheap Lyft trips?

Mostly my own contribution, and partially VC money.

1. http://www.cnbc.com/2017/01/12/pipsqueak-lyft-could-reach-pr...

Of course you should not stop using it if you prefer it. It was implied here that only uber rides were cheaper because of VC money. Which is not the case. Same applies for Lyft.

I live in Chicago; I rarely use Uber. Mostly Lyft. Works just as well and less embroiled in ethical faux pas.

Same applies for Lyft. The rides are cheap because of VC money. It is a good thing to have competition to keep the prices in check.

The original comment referred to price gouging due to lack of competition. VC money might subsidize the rides (or more likely find ongoing development?), but Uber and Lyft are bound to be cheaper than taxis for as long as they can remain less entangled with governments (less artificial price inflation).

The problem is that Uber loses money on every ride, so they'll have to raise their rates as soon as they stop being subsidized by VCs -- unless they have self-driving taxis by then.

How are they losing money on each ride? They are not managing fleets of cars, employees, etc. It's an app.

That is exactly the question you should be asking, thank you.

Answer is they provide great rates for passengers - see all of the anecdotal evidence here - and great pay for drivers.

It literally is "too good to be true."

It's just an app--with a $20B valuation and about as much in free cash.

Or they stop investing so heavily in platform development. Without detailed knowledge of their accounts it's hard to predict what might happen when capital shrinks.

How are these guys not profitable? It is basically an app that gets paid to match riders with rides.

My guess is they are spending a lot of money expanding. Once done, they will be instantly profitable.

They subsidize their drivers to keep their prices artificially low. It helps them out-compete the folks who have to turn a profit.

At that point, I'll enter the market and only charge 2x taxi fares, and undercut Uber. I'll be a millionaire!

Then a dozen smaller companies will pop up with similar services and cheaper prices.

The genie is out of the bottle.

That's the thing - without the artificial entry barriers like medallions, if they do that then a competitor like Lyft can show up and undercut them very quickly.

Well. Sort of. I wouldn't underestimate the complexity of all the logistics and automation required to deliver this consistently, reliably, and at a large scale, not to mention network effects, market saturation, getting to critical mass, etc.

It's not getting any harder though.

As long as Lyft is around, they can't.

You're right. There are no markets in which a few dominant players capture significant profits because there are only a few dominant players who exploit barriers to entry or network effects to stay on top...

Except pharma, telecom, energy, airlines and one or two others...

The barriers to entry with ride sharing are absurdly lower than anything else on that list. The network effect is pretty weak, because it doesn't cost consumers/drive more time or energy to keep multiple apps on their phone.

Other than pharma, you just mentioned 3 industries that have very low margins. They aren't making a ton of money on their monopolies.

Indeed I think he proved my point.

I am not sure who would like taxi industry to pharma?

unreasonable profits should be protected by medallions. if uber does not come up with medallion system that is enforced and protected by elected officials, their rate hike will be a fart in a wind.