When Uber Eats its Own Business, and That of its Competitors Too

How does diversification influence a platform firm's existing business? We conjecture that a diversifying platform firm faces a unique challenge in allocating complementors' resources between businesses due to its lack of ownership over them. At the same time, the potential synergy from serving multiple businesses in a diversifying platform firm can divert ownership-free complementors away from competing platform firms. We analyze changes in the rideshare business in Manhattan, New York City, after Uber launched Uber Eats in the city. We find that the launch of Uber Eats was associated with a reduction in trip volumes for both Uber and Lyft. Both effects were weakened during rush hours, when the opportunity costs of resource reallocation to Uber Eats were higher for the rideshare drivers.