Uber Still Doesn't Look Like the Next Facebook

Uber has been in the news a lot lately, and most of it hasn’t been pretty. Allegations of a sexist workplace culture, a high-profile legal battle with Alphabet Inc. (Google) over self-driving car technology, reports of attempts to skirt local laws, an anti-Uber Twitter campaign, and an exodus of top talent have put the ride-hailing giant on the back foot. But so far, these problems don’t seem to have put a huge dent in Uber’s market share -- as the website TXN found in March, even after many of these problems hit the news Uber was still providing almost four times as many rides as its biggest rival, Lyft Inc.1496687500568

Negative publicity and management squabbles are not helpful, but in the end, it will probably be the strength of the ride-hailing business model that determines if Uber -- and rivals such as Lyft -- live or die. And it’s here that Uber and its investors should be worried. Basic economics shows some cracks in Uber’s model. Those weaknesses might not be catastrophic, but they probably deserve more attention than they’re getting.