Uber to Seal $3.1B Deal to Buy Careem This Week • Hacker News Board

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#41

Post by nindalf » Mon, Mar 25, 2019, 7:03 AM UTC

m3h wrote: post #40

As an end user of Careem, I'm waiting for the impending doom of price increase and bad service. Uber and Careem are the only two service providers in my country (Pakistan); before Uber entered, the prices were quite high because Careem had no competition and they cashed in their monopoly. Uber entered the market and caused a price war driving prices per km down significantly and causing both providers to add new feat…

The rules still apply if both companies are foreign and the deal is happening overseas. The competition regulator in all the territories the companies operate need to give their approval. Take the Disney Fox deal as an example. The Brazilian regulator required that Disney divest it’s sports offerings in Brazil alone because otherwise the combined company would hold all the football rights.

If you’re wondering why the competition regulator in your country didn’t stop this particular deal there are a few possibilities.

1. They’re funded so poorly they don’t have the resources to investigate the impact.

2. They did investigate but Uber gave enforceable assurances that consumers wouldn’t be impacted.

3. Uber bribed the regulator. Not saying Uber engages in such behaviour on the reg, but it’s possible.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#42

Post by adventured » Mon, Mar 25, 2019, 7:12 AM UTC

DevX101 wrote: post #15

philsnow wrote: post #10

Doesn't this, so close to their purported IPO, fly right in the face of what they consider to be their network effect? Why would they need to buy competitors if not because it's expensive for them to compete against local upstarts who own a smaller market?

Uber's network effect is localized to cities. If Uber attempts to enter a market with a strong local player, the local player stands a decent shot at defending since Uber's global dominance doesn't really transfer over to that particular city. This is unlike social networks, like WhatsApp, where the network effect is truly global since people often have friends and relatives in distant cities.

Uber's network effect isn't localized at all.

Try getting someone to keep 27 different ride hailing apps on their phone, and convincing that person to maintain them all and remember which accounts correspond to which cities.

Uber only doesn't have a national network effect if you view people like software in appraising their potential behavior. Actual human behavior is thus: I have zero interest in maintaining many ride hailing accounts, I have zero interest in having numerous ride hailing apps on my phone, I want as few as reasonably necessary.

If you can get people to keep two or three ride hailing apps on their phone for one country, that's pushing the limits of consumer behavior. They do not want to bother. They also do not want to be negatively surprised by a new competing service, which limits their willingness to experiment when there are existing known solutions. They'll choose well-understood Uber at 75%-85% good enough rather than risk having a bad experience in regularly trying out a new upstart. Actual consumer behavior functions as an enormous competitive moat in fact.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#43

Post by jussij » Mon, Mar 25, 2019, 10:10 AM UTC

Gustomaximus wrote: post #34

jussij wrote: post #27

Earlier quoted context omitted.

That $50b figure is not their revenue, but their gross bookings. For example Uber's last quarter revenue was $3 billion on some $14 billion in bookings, with a loss of about $800 million.

My understanding; $14 billion is revenue $3 billion is their earnings after driver costs.

Why that $14 billion can not be called revenue is Uber specifically structures it's business to make sure their drivers form no part of the business, instead they insist all their drivers are independent contractors.

They do that specifically to reduce their running costs and hence maximize the profit on their actual revenue.

That would be like saying all iPhone App developers are working for Apple, when in fact all Apple does is take 30% of each and ever dollar these App developer earn in sales.

Likewise Uber just puts it's 30% Uber tax on every dollar it's drivers earn.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#44

Post by fazilakhtar » Mon, Mar 25, 2019, 10:37 AM UTC

TuringNYC wrote: post #35

deogeo wrote: post #29

Earlier quoted context omitted.

It's interesting how little of this strategy involves providing a better service. But I don't think they're alone or even special from this perspective (e.g. similar to the rise of Microsoft). I think the prevalence of "business strategy", as opposed to product/service improvement, in the growth of corporations, warrants much more scrutiny than it gets. After all, corporations should serve society - how do strategic…

Good for Uber, but I'm disappointed as a customer. I did extensive travel overseas in Qatar and the Careem app was excellent. They had a clear local strategy with local customization to capture users. For example - [Local flavor] Using a button called "Yallah" instead of "Go" - [Local Knowledge] Pre-coding airport pickup locations (unlike Uber which had you try and figure it out directly with drivers, who often did n…

Uber has pre-coded locations for HIA now.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#45

Post by quickthrower2 » Mon, Mar 25, 2019, 10:49 AM UTC

dmode wrote: post #37

googlemike wrote: post #19

Earlier quoted context omitted.

$50b in revenue last year is nothing to scoff at. They have levers for profit but instead re-invest every dollar. Your argument sounds exactly like what people said about Amazon years ago.

$50bn is total bookings, which is impressive. Revenue, I believe is $11bn runrate. But that doesn’t address cash flow depletion. I do believe they have runway though

11bn revenue and runway used in the same sentence. The late 2010s are crazy times.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#46

Post by govg » Mon, Mar 25, 2019, 10:57 AM UTC

adventured wrote: post #42

DevX101 wrote: post #15

Earlier quoted context omitted.

Uber's network effect is localized to cities. If Uber attempts to enter a market with a strong local player, the local player stands a decent shot at defending since Uber's global dominance doesn't really transfer over to that particular city. This is unlike social networks, like WhatsApp, where the network effect is truly global since people often have friends and relatives in distant cities.

Uber's network effect isn't localized at all. Try getting someone to keep 27 different ride hailing apps on their phone, and convincing that person to maintain them all and remember which accounts correspond to which cities. Uber only doesn't have a national network effect if you view people like software in appraising their potential behavior. Actual human behavior is thus: I have zero interest in maintaining many r…

I think it's a very small segment of their customer base that actually requires cab hailing services in 10+ cities. Most people working day jobs will not visit more than that many cities over the course of the year, and Uber possibly serves most of them.

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#47

Post by rak00n » Mon, Mar 25, 2019, 3:55 PM UTC

m3h wrote: post #40

As an end user of Careem, I'm waiting for the impending doom of price increase and bad service. Uber and Careem are the only two service providers in my country (Pakistan); before Uber entered, the prices were quite high because Careem had no competition and they cashed in their monopoly. Uber entered the market and caused a price war driving prices per km down significantly and causing both providers to add new feat…

Why isn't Lyft going for foreign markets as aggressively as Uber?

Re: Uber to Seal $3.1B Deal to Buy Careem This Week

#48

Post by m3h » Mon, Mar 25, 2019, 6:32 PM UTC

rak00n wrote: post #47

m3h wrote: post #40

As an end user of Careem, I'm waiting for the impending doom of price increase and bad service. Uber and Careem are the only two service providers in my country (Pakistan); before Uber entered, the prices were quite high because Careem had no competition and they cashed in their monopoly. Uber entered the market and caused a price war driving prices per km down significantly and causing both providers to add new feat…

Why isn't Lyft going for foreign markets as aggressively as Uber?

I think that would be because Uber has some USD 24 billion invested in it while Lyft has raised nearly USD 5 billion (figures from Crunchbase). With deep pockets, Uber's right move is to spend fast and monopolize as much of the market as possible. They do this by buying out competitors or offering massive discounts on their pricing to out run their competitors. They can afford to figure out how to be profitable later.