anotherlimey

How are you so sure?

https://www.google.com/amp/s/motherb...rue-cost-uh-oh

https://www.google.com/amp/www.marke...7-E90BE7E240CC

Shard

Are the Uber drivers receiving a top up (from Uber) on what the customer pays?

anotherlimey

Not that I'm aware of, but that's not how Uber subsidizes the fares.

Giantaxe

And it's hardly a secret that Uber subsidizes fares in many places:

Uber Ride: Investors Are Questioning the True Value of Uber | Fortune.com

http://fortune.com/2016/08/25/uber-billion-loss-2016/

Shard

In that case they are not subsidizing fares. Operating at a loss is a different issue and doesn't effect the consumer.

anotherlimey

Artificially low prices will effect the consumer.

Shard

They are not artificially low if the the Uber driver is willing to drive the person for the said amount. That's the market price. Black cabs operate as a cartel, albeit a higher service cartel.

anotherlimey

The driver isn't the only expense. It's artificially low when the company can't cover it's expenses.

Oakvillian

Best comment I've heard on some of Uber's legislative woes and hand-over-fist financial haemorrhaging: "if your innovative business model consists primarily of ignoring existing regulations and then complaining about them after the fact, you need to re-examine your definition of innovation."

Giantaxe

The point is drivers are not driving for "said amount". In many places they are receiving extra payments from Uber as well:

"The subsidies Uber grants its drivers was the main reason for the loss, finance head Gautam Gupta told investors in a quarterly conference call"


Uber Lost More Than $1 Billion During the First Half of 2016 | Fortune.com

Steerpike

Uber sets the prices for the service to the consumer at a competitive level, designed to compete with traditional cab services (and varies by market). Uber independently sets a rate for the driver designed to attract and retain drivers (which again varies by market). The difference, essentially, goes to Uber to cover its operating costs (including fees, etc). If (amount paid by consumer) - (amount paid to driver) - (operating expenses) is positive, then they are making a profit. If that amount is negative, then they are running at a loss (and the money has to come from their capital).

It is very typical for most startup businesses to intentionally and knowingly operate at a loss in order to gain market share and reach a critical mass. The key to any successful startup business is whether they have a good sense of how to reach the point where they are making a profit, and a clear view of when that will happen.

You can wordsmith it however you want, but Uber is currently subsidizing the consumer price of it's service by drawing on its capital. Whether this is sustainable or not remains to be seen.

scrubbedexpat091

I kind of think here when/if Uber is allowed, the fares will be set for them by the government just like taxi cabs. I just don't see the government permitting Uber to set their own fares.

It's going to be a political fight most likely, the Green Party is expected to introduce legislation to allow Uber and the like, but the NDP risks losing support from unions and taxi industry which they need, but the NDP needs the Green Party support to stay in power, so shall be interesting.

Shard

That's a separate issue. That's about the company. It can't cover it's expenses in the way Amazon couldn't initially cover it's expenses. Uber is building delivery infrastructure and so will continue to attract funding.

However from a taxi fare point of view, the fares are not being subsidized. The black cabs are having their profit margin squeezed, that's all.

Shard

The problem with this argument is that it confuses subsidizing operating cost with subsidizing the fares that the customer pays. Unless the Uber is paying a premium on the fare charged to the customer (which it did initially but apparently no longer does) then the fare is not being subsidized. The driver is not being subsidized.

scrubbedexpat091

Seems Uber may just not like following rules?

https://globalnews.ca/news/3769054/r...edium=Facebook

The rules don't seem too difficult either and I wouldn't consider them challenging as the company claims.