It seems like in reality such monopolies are limited geographically. Being the leading transportation service in Barcelona doesn't really get you any discounts or brownie points in Beijing or Cleveland.
In theory such economies of scale would result in various supply-side margin improvements for the operators (cheaper gas, cheaper car washes, cheaper tires, cheaper insurance, all due to bulk purchasing power) but so far we have not seen that happening either.
> Being the leading transportation service in Barcelona doesn't really get you any discounts or brownie points in Beijing or Cleveland
It wins you brand loyalty with travellers. I've come to expect Uber just works, everywhere. Sometimes Lyft or Juno or Careem or Hola are marginally better somewhere, but they aren't minimally competent almost everywhere, and that's a big difference.
That said, I agree with you. Few foreign governments will permit an American company to see where their citizens are, where they're going and with whom they are meeting for how long.
> Few foreign governments will permit an American company to see where their citizens are, where they're going and with whom they are meeting for how long.
Of course they will. See Google, Facebook and hundreds of others. The EU –to use an obvious example– also doesn't discriminate non-EU companies but only requires them to implement the same safeguards expected from EU companies.
But I just don't see how "data" even plays any major role in the future of Uber. It's ultimately a commodity dominated by the costs of a driver's time. Cost/risk of switching is low. Barriers to entry are almost nonexistent.
When Uber eventually goes Under, net effect will have been the transfer of a few million passengers from a to b, and a few billion dollars from whoever owns stock when the ride ends to the drivers (and possibly earlier investors who had the good sense to see it as the ponzi scheme it is).
> Few foreign governments will permit an American company to see where their citizens are, where they're going and with whom they are meeting for how long.
Bulk purchasing power does not mean anything when the people you buy from in all your different locations are not the same.
Not even for gasoline, which is the simplest commodity of the bunch, will you find the same companies selling to you in the US as in Europe as in the Middle East as in China as in India.
Can anyone point out a single thing that Uber buys locally that they can get from the same vendor in more than a handful of countries?
Or maybe it's a commodity race to the bottom in each market? Witness how many entrants came into Austin when Uber and Lyft refused to follow new regulations enacted by the city. [1]
You'll argue network effect or mindshare. I'll argue people will hop off a plane and search "<city> rideshare" on the app/play store for the app (you can buy ads for you app in the App Store now, no?).
Synergistic effects will only kick into effect once they own or at least maintain their fleet, which will take another couple of years. Here in Austria, Uber is still a small niche and it's unthinkable that Uber will be more than a cheaper version of MyTaxi (https://de.mytaxi.com/index.html) within the next years. If legislation allows self-driving cars, that will of course change quickly.
This is a very different value proposition for investors. Instead of a high-tech company, they now own a fleet of cars parked in a bunch of (owned, leased) garages with mechanics and car washers on staff.
What intrinsic advantage does such company have over old-school taxi shop? What barriers are there to discourage someone else from also owning a bunch of similar cars parked in similar garages maintained by similar mechanics and washed by similar car washers?
"It seems like in reality such monopolies are limited geographically."
Yes - they will be won 'city by city'.
It's entirely possible that Lyft gets Houston, Uber gets Dallas - i.e. once the critical mass is established, it's hard to push out the incumbent.
The funny thing is, they are all planning on 'self driving cars' and at that point, I see so many shifts in the landscape.
The advantage of Uber was the drivers - willing to put in extra time full/part to pick up the slack from taxis etc..
But with 'self driving' I'm not sure if there is a natural monopoly. So many other massive, massive entities would be interested and could make a play: automotive companies, car rental agencies etc. etc..
There is a natural monopoly. The biggest supplier will most likely have a taxi for you nearby, so will most likely have the shortest wait time. Then, they will have the highest utilisation, and therefore the lowest cost.
This is incidentally precisely why I think they should be regulated like utilities. You could have independent ride-offering firms providing cars (with or without drivers, and possibly at different service/comfort levels), and independent apps providing billing and possibly extra services, but they all have to go through one network regulated as a utility (so that you could e.g. hail a Lyft car through the Uber app).
I think that would avoid monopolies and give maximum benefit to riders and drivers.
That's not a natural monopoly. The capital costs are nowhere near on the order of magnitude required to block new VC-backed companies from entering the market. Your comparison to utilities aptly demonstrates this point: to introduce a new transportation service, you would need to fund software and digital infrastructure, as well as physical vehicles (self-driving, most likely). That is well within the realm of a funded company to achieve. No digging up roads to lay new water pipes, creating new easements and installations for electric power lines, or any of the other substantial barriers to entry that existing markets for public utilities present.
Even setting that aside, your suggested solution to what is, in my view, a non-problem, is to introduce exactly the kind of regulations that have resulted in the abysmal service and high cost of existing taxi firms.
In order for firms to be incentivised to create these new business models - and let's be clear, the Uber/Lyft model is very much a new and revolutionary model in this industry - there needs to be the just reward for their investment. This is the incentive that creates new value. If you regulate that value away, you will be left with a new tier of lacklustre taxi 2.0 offerings.
However, they will earn monopoly rents in those local markets. These rents will be used by Uber to cross-subsidise their 'tougher' markets that they've bypassed for the moment (either due to incumbents with bigger bankrolls or more insistent regulators).
Put less delicately, they'll use monopoly profits in other local markets to prop up their predatory prices until their local competitors go bankrupt. At this point they'll start charging the monopolist profit-maximising price.
In theory such economies of scale would result in various supply-side margin improvements for the operators (cheaper gas, cheaper car washes, cheaper tires, cheaper insurance, all due to bulk purchasing power) but so far we have not seen that happening either.