When Uber Eats Its Own Business, and Its Competitors’ Too: Resource Exclusivity, Oscillation, and Cannibalization following Platform Diversification

When Uber Eats Its Own Business, and Its Competitors’ Too: Resource Exclusivity, Oscillation, and Cannibalization following Platform Diversification

Hyuck David Chung

University of Michigan, Stephen M. Ross School of Business

Yue Maggie Zhou

University of Michigan, Stephen M. Ross School of Business

Christine Choi

Abstract

How will a platform firm’s diversification affect its existing business? While platform diversification enables complementors to share some resources across businesses, it may also create opportunities for complementors to oscillate other complementary resources to maximize utilization, thereby hurting the platform firm’s existing business. In addition, it may divert complementors away from competing platform firms. Such sharing-enabled resource oscillation may be due to exclusivity in the use of some complementor resources at the transaction level and the lack of control by platform firms over them at the organizational level. Using datasets on the rideshare and food delivery businesses in New York City, we find that the launch of Uber Eats reduced Uber’s and Lyft’s rideshare trip volumes. These effects were weaker during rush hours.