Thursday, December 1, 2016

Silicon Valley's Relentless Hype About Disruption is Questionable: The Case of Uber

Despite the hype, I have never been convinced by Uber, there is a reason taxi companies formed and is wasn't just radio dispatch.  Other things such as ability to select and keep skilled drivers, economizing on capital stock, insurance and maintenance seemed to me party powerful economic forces.

Uber's premise is essentially that there need be no more central control thanks to smartphones and that there is no such thing as economies of scale in taxi service.  The former might be right, but the latter is questionable.

Now there is this expos√© of Uber in the blog Naked Capitalism, nicely covered by the Financial Times' Alphaville blog.  It appears that Uber is one, losing money at an astonishing rate, and two, engaging in predatory pricing - deliberately pricing below cost to drive competitors out of business.

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