Because they'll be able to undercut any small competitor that attempts to enter one of their markets by subsidizing it with revenue from everywhere else.
Not really. It’s a large market with almost no barrier to entry.
Either they have huge margins or they don’t. If they do have large margins someone will come along and attack the most profitable segment of the business. That could be airport rides, or having extra cars outside the end of a sporting event, or whatever.
As long as switching costs for customers are low then they can’t defend high margins. For monopoly to work you either have to corner supply somehow or lock the customers in. There’s no plausible mechanism for either with taxi services.
Supply is a barrier to entry. These 2 sided market places require having a large supply of drivers and riders to be viable. A new competitor would probably need to come in with a managed fleet and be ready to operate at a loss for a really long time.
At their current scale uber and lyft don't need to have huge margins, they just need to break even and can make up for it with volume. Like amazon they could undercut any new competitor and play the long game. Their marginal costs are so low that they could win out any city with competition by aggressively cutting their 25% of the fare.
> These 2 sided market places require having a large supply of drivers and riders to be viable.
No, they don't. They could just hang out outside of big crowded events, like the end of a stadium concert, or rush hour at the airport. Or whatever the peak crunch point is for the existing service. It would be trivial to make at least some money doing only that.
Then the existing service sees its margins eroded. And so on.
There's just a ton of handwaving here, but there's no mechanism for a monopoly. Burden of proof would be on your side to demonstrate it. It's absolutely trivial for customers to switch, there's no way to lock them in. At least some people would do it literally to save $10 on a single ride to the airport. And you don't need a fleet to take one person to the airport. Or a couple. Or to strike a deal with one large company, or airline, or whatever.
Acquiring a monopoly is pointless if you can't defend it. And you can't unless you can constrict supply or lock in demand. Uber and Lyft can't and aren't ever going to be able to.
