Where are Uber’s real competitors? The obvious answer would be the traditional taxi operators in large cities. Taxi services are usually controlled by city authorities or other regulators, to ensure that the prices are fair, and that the drivers and the vehicles are safe. Taxi drivers in various cities have protested against Uber, arguing that it cheats regulation by using unlicensed drivers to undercut prices. However, regulators (such as the UK CMA) have sometimes decided that consumer interests are best promoted by allowing Uber to compete with established providers.
Uber is therefore selling itself three ways – not only to passengers and drivers but also to regulators. In a sense, this makes it a three-sided platform.
However, as discussed in my earlier posts, some commentators are dubious that Uber can ever be profitable in this competitive space, even with substantial deregulation in its favour. What Uber really wants (they argue) is to persuade city authorities to stop investing in public transport, to stop subsidizing buses and subsidize Uber transport instead. If other competing modes of transport are decommissioned, the Uber business model starts to look quite different – just another privatized yet publicly subsidized monopoly, supposedly independent but effectively underwritten by the government.
All you need to know about Uber (BBC News, 9 July 2015) Uber says TfL cab proposals ‘against public interest’ (BBC News, 2 October 2015)
Does Uber have an ally in the CMA? (Maclay Murray & Spens, 12 October 2016)
Anne-Sylvaine Chassany, Uber: a route out of the French banlieues (FT, 3 March 2016)
Dave Lee, Is Uber getting too vital to fail? (BBC News, 10 December 2016)