It's a good question that I don't know enough about the taxi business to answer. However, it's also a pretty general/speculative argument, so not the strongest case for "Uber can never be profitable", especially since there are general/speculative arguments on the other side too. For example: economies of scale have worked in other industries, why can't that happen here? And: software-is-eating-the-world has generally been holding true, so why would this be an exception?