The company benefits from funds to cover its losses that states no longer have.
Taxis have again recently demonstrated against the services of VTC. This time, Uber was not directly in their sights, but the transport giant crystallizes fears of a radical economic change, especially since it has emerged in just a few years.
As Eric Le Boucher recently noted on Slate, the response to urbanization should be to promote these new VTC services to lower prices – provided that decent payments are provided to drivers and that the gains are distributed among the actors.
However, the alternatives to the Uber platform, which becomes hegemonic, are slow to hatch. Is it because Uber has developed so finely its model of cost rationalization and rotation of races that it has become unsurpassable? According to EvgenyMorozov, a very critical author of the Silicon Valley models, the explanation must be found elsewhere. In the Guardian -text also published in Le Monde Diplomatique-, he argues that the plan of Uber is to lower its rates to the point that new customers prefer to use it rather than taking their car or public transport. In some areas, Uber has set rates so low that they do not even cover the price of fuel and vehicle wear.
And the advantage of Uber in this game is that it can afford to “burn” as much cash as necessary to achieve its goals and ahead of the competition. In the first three quarters of 2015, Uber would have earned 1.2 billion dollars for 1.7 loss.
This money comes from investors like Google, Amazon, Goldman Sachs: if they have as much to invest in Uber, it’s because governments have a hard time taxing high-tech multinationals to the level of their profits. However, this money would be needed to invest in public transportation alternatives or in partnership with the private sector.
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