[johnloeber]

Hi, author here. This is a good point that's worth addressing.

Technology is not the reason it's a winner-take-most market. It's helpful, but in the long term, many players will have comparable technology.

Utilization is the reason why it's a winner-take-most market. If you have the most popular app with the best drive liquidity, that's a self-reinforcing feedback loop. In turn, it means that your economics are better because your cars are going to be utilized at a higher % of the time. This in turn means that you can charge lower prices, and so forth. (A similar dynamic has been the case for Uber, for example.)

[zamfi]

Right. I guess I see that argument as an "economies of scale" argument, rather than as a "natural monopoly" argument.

In many industries large players will benefit from economics of scale. This is definitely true for Uber. But it's not a natural monopoly position -- if someone could offer the same service for half the price, people would switch, as we all expect they will when Waymo does this.

This is different from, e.g., AirBnB, where there's not that much a competitor could offer, necessarily, and they'd have to build a huge set of inventory from scratch, a true two-sided marketplace. A competitor that manages to cut the service fee in half would still face an uphill battle building up that marketplace.

[johnloeber]

The natural monopoly emerges from the economy of scale: eventually you are offering a product at a price that nobody else can profitably undercut, because they do not have the same infrastructure that you do. And obtaining that infrastructure is too expensive for anyone to fund.