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Comment by strictnein | Hacker News Reader

Which "massive subsidies" are they receiving, exactly?

Billions of VC investment money. Actually, I don't agree with the GP. In my view Uber represents one of the biggest transfers of wealth from VCs to the common man in the last three decades. When the funding eventually dries up and Uber are forced to raise their prices, the common man will just move on and leave Uber to go bankrupt. It's beautiful really (at least the LP money coming from pension funds etc. is finding it's way back to the originators in the form of discounted travel rather than going up in smoke).

The common man being the users or the drivers?

AFAIK Uber are subsidizing users and drivers, so both? Although I think the users are getting the better end of the deal.

I'm not sure the drivers really have a good understanding of their cost base. I doubt very much that Uber covers the average cost per mile (though hopefully the marginal cost). Would be interesting to see a proper analysis.

It's beautiful until they become a monopoly and jack their prices up. I reckon they've got no chance, though. There's no network effect to speak of and competitors can start small and grow, without needing billions. In 15 years from now, the supply of self driving cars will be the limitation and they'll be available in high quality and low price from all the major manufacturers. The actual technology in uber's app is basically nothing, any company could replicate it without too much hassle.

He is talking about fare subsidies for passengers paid for by VC money, slimmer wage packets for drivers, and extreme tax avoidance. He isn't talking about subsidies from a government source as I think you are implying. Uber lost over $1 billion in 2016 alone with the express purpose of capturing a global monopoly by driving down prices well into loss making territory. We had uber-like app based companies in London for years before Uber with the likes of Addison Lee, but Uber effectively destroyed them with predatory pricing funded by VCs.

The article details this, ctrl+f for "Understanding the economics"

i.e. they are subsidising rides themselves, temporarily.

None, actually. They are referring to what is normally called "VC funding". But here the GP wants you to believe that Uber is somehow receiving billions in public money and gaining business advantage from that. So they used "subsidies".

>> But here the GP wants you to believe that Uber is somehow receiving billions in public money

Absolutely not, subsidy does not only refer to public money, I'm not sure why you think it would. I'm not under any illusion that public money is being poured into Uber, nor would I wish to give that impression.

How ridiculous.

You did read the analysis of the average NYC Uber fare covering only around 41% of the cost, right?

Uber are burning through billions upon billions of dollars of investment money.

They're losing $2bn a year - that money has to be coming from somewhere (as elsewhere noted, VCs.)

Unpaid tax and VC money.

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