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China Criticizes Subsidized Ride-Hailing Apps As Anti-Competitive (thestack.com)
An anonymous reader writes: China's minister of transport Yang Chuantang has warned that the current round of ferocious price-wars among China's leading ride-sharing app providers, including Didi Dache and Uber, represents an attempt to kill local competition with massively-subsidized price cuts that will not subsequently be sustained. Chuantang, speaking at the annual national assembly in Beijing, said that the subsidies "are aimed at occupying more market share within the short term and is competitively unfair for the taxi industry. It is unhealthy and cannot be sustained in the long term." Uber is currently investing (or, arguably, losing) $1 billion a year in its attempts to consolidate a place in the Chinese ride-sharing market.
It's an old market manipulation technique: give your product away to increase market share, and then cash in when you drive as many competitors as possible out of the market. It takes time to smelt metals, build assembly lines and crank up production.
But this doesn't work so well with services, especially those with little capital investment. A ridesharing service doesn't even have to build fast food stands.