Maybe, but if each market is isolated then the network effect is small. To dominate a market you just need enough drivers available to meet the market expectations. If you have two businesses in a market supplying an equal quality service, but where one is 20% cheaper, then the cheaper service will capture the majority of the market.
An alternative hypothesis might be that nobody can think of a way to make money by investing in such a market and so they don’t.
My god I hope this is not Uber’s plan. While this would actually work it is very, very illegal [1]. I can’t see the USA government turning a blind eye to such blatant antitrust activities, but after what they have let the banks get away with maybe it would work.
I think we are talking past each other here. Any competitor with an equal number of drivers can offer the equivalent to Uber pool in a market.
I was referring to a business model where Uber cut prices in a small market when a new competitor enters to kill them before they can get going. This model works really well once you are an established business (the Standard Oil model) hence why it is illegal.
Yes, we probably are. Not much of what you write makes any sense. Cutting prices is obviously not illegal. In extremely rare circumstances if the pricing is clearly below cost, you might have something. But that's even more unlikely in the software or service industries.
Yes I agree. I view the taxi industry as being made up of many separate markets where dominating one geographical market gives a company little competitive advantage in other geographical markets and hence why the taxi industry stayed fragmented when other areas of the transport industry consolidated. If this is wrong then the first business to win the consolidation race will dominate the market long term.
I don’t think Uber is in a commodity market right now (there is far too much innovation going on), I just don’t know how you prevent it becoming one in the future. Your current valuation suggests that a lot of smart money disagrees with me :)
An alternative hypothesis might be that nobody can think of a way to make money by investing in such a market and so they don’t.