The economics, structure, and behavior of platform ecosystems and organizations

There is more than one way to skin a cat, goes the old maxim. And there are more ways to increase competition in ecosystem economics. Here we have Didi opening its ecosystem to compete, and at the other extreme, Uber attempting to close the door to its markets by a subscription model.

In Didi opens the door to third party ride-hailing players as fight to build China’s best super mobility app hots up, Sarah Dai reports on ride-hailing company Didi seeking to counter new competitors by opening up its platform to smaller ride-hailing companies. This is an innovative move to retain and capture market share under new pressures.

This is being trialed in Chengdu, in an ecosystem partnership between Didi — the ride-hailing leader in China with 88 percent market share — and Miaozou, a ride-hailing unit of Tongcheng, a popular travel platform:

The two companies have worked together for several years on airport trips and have now teamed up to bring “extra supply” to mobility services, offering quicker, more affordable and reliable rides, according to a Didi spokesman.
“As a mobility platform, Didi’s major goal remains to enhance its own services,” said Sun Naiyue, an analyst with consultancy Analysys. “The response time and actual wait time for users are two important gauges.”

The trend is a response to new competitive pressures from other ride-hailing companies, who are likewise forming ecosystem alliances:

Meituan Dianping, which offer hundreds of services on its app, launched its aggregated ride-hailing service in 10 more Chinese cities including Beijing earlier this month. Under the pilot program, users can compare offers from several platforms such as Geely’s Caocao Car and Shouqi, and hail a ride via the Meituan app. Autonavi, Alibaba’s maps app with 100 million daily users, has its own aggregated platform that allows users to book rides.
Didi, long-vaunted as market leader after triumphing over arch-rival Kuaidi and beating Uber out of the country in 2016 to end a cutthroat subsidy war, is also battling to improve ride safety after driver scandals last year.

And although Uber and Kuaidi have been defeated, many new competitors are entering the ride-hailing market, like BMW, Shanghai Automotive Industry Corporation, and electric vehicle startup Xpeng Motors. My bet is that auto manufacturers, who are arriving late to the ride-hailing world, will find it better to join established ecosystems, like Didi and Meituan.

Meanwhile, at the opposite end of the competitive spectrum, Uber is testing a very aggressive move, as Megan Rose Dickey reports:

Uber is actively testing a monthly subscription pass that combines rides, Eats, bikes and scooters. In this pilot phase, Uber is testing a few different iterations in San Francisco and Chicago, but each version includes a fixed discount on every ride, free Uber Eats delivery and free JUMP (bikes and scooters) rides. The pass costs $24.99 per month.

The reasoning is based on Uber’s dominant market position, and the cross-over effect of having a quartet of rides, bikes, scooters, and food delivery. Just as an Amazon Prime customer with free shipping will naturally order from Amazon unless an alternative offers significant discounts, Uber is leveraging the same buying dynamics. Why would you rent a bike from Lyft if you already paid for the package with free JUMP bikes? You wouldn’t.

This tactic by Uber plays to its strengths and undermines possible discounts by Lyft and Postmates. Uber may be creating a monopolistic advantage similar to Amazon’s in ecommerce, and close competition down cold.