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points by mtswish 12 hours ago | 0 comments

Monopolies are bad for consumers

This is like the argument that Amazon has a monopoly, but it's actually even weaker. Doordash is just picking stuff up from local vendors that buyers could visit themselves, whereas Amazon is shipping people things from all over the world.

Amazon has been pretty successful in arguing that Walmart, Nordstrom, and everything in between are their competitors, and I expect that DD and IC will have no trouble doing the same (especially under this administration).

[–] rektomatic 12 hours ago

How would this be a monopoly?

[–] mtswish 11 hours ago

I wouldn't be the one to ask about the details, but I think it would be foolish to surmise that two companies taking up 3/4ths of a sector shouldn't go through some anti-trust scrutiny.

[–] paulddraper 11 hours ago

77% of the U.S. 3rd party food delivery is DoorDash + Instacart.

(Nearly all of the remaining amount is Uber Eats.)

So if not a monopoly, then at least a duopoly.

As a rule, two-sided marketplaces are very difficult to disrupt.

[–] tomrod 11 hours ago

The BATNA:

- Other delivery service

- Other task service

- Go yourself

While they are an effective duopoly, it would be good to also consider them as monopolistic competition versus a true market split out -- there is very little traditional moat, and almost only network effect due to restaurants accepting their services and menu.

[–] paulddraper 10 hours ago

> almost only network effect due to

"Only" is a massive amount of lifting in that sentance.

Network effects are among the most durable/effect competitive qualities. And they have that network on both sides.

[–] rektomatic 11 hours ago

There's literally 100s of apps that provide food delivery service. Just because one is doing really good doesn't make it a monopoly.

[–] howunfortunate 11 hours ago

So more like a 0.77opoly then

[–] tomrod 12 hours ago

But economies of scope, such as they exist, can be good for consumer welfare (unpopular as that is to discuss in current public forums).

Two chunks of overhead (IT, web app, mobile app, finance, HR, etc.) instead of one can be bad for consumers too.

But yeah, flexing pricing increases to gobble up consumer welfare is what the FTC is supposed to rally against, and, while services expand their markets aren't that different.

EDIT: Wow, people really hate this comment! I'm not being normative here. Economies of scope are the thing that any acquiring companies with any reasonable market share will argue for their case, its textbook economics and what the FTC is trained for.

[–] bix6 11 hours ago

You’re getting downvoted because nobody gives a rats ass about efficiency for massive corporations that continue to abuse their power and make our lives unnecessarily expensive while their leaders (generally) tear down democracy.

[–] tomrod 6 hours ago

Then I have failed to explain myself. What I was saying is that "economies of scope will reduce prices due to reduced costs" will be the core argument massive corps argue when merging and concentrating market size -- and that rarely happens in reality.