CHINESE powerhouse Didi Chuxing’s acquisition of Uber Technologies Inc.’s China operations marked the biggest move yet toward consolidation in an industry that many investors and Silicon Valley pundits view as a winner-take-all game.

    On the day the Didi deal was announced earlier this month, Uber board member Bill Gurley said Uber’s rivals in other markets had a slim chance of splitting the market with the dominant player, just as Uber struggled to erode Didi’s share in China.

    After China, the industry will consolidate in other markets, said Hans Tung, an Asia-focused investor and managing partner at GGV Capital, which backed Didi and Grab, a Singapore-based ride service.

    “There will be a dominant No. 1,” he said that same day.

    The consensus of 11 economists interviewed by Reuters, however, suggests an entirely different scenario, one of perpetual competition in a business with relatively few barriers to entry.

    “That one firm wins is a narrow and not accurate way to think about these firms,” said David Evans, chairman of the Global Economics Group and co-author of a recent book that included Uber, “Matchmakers: The New Economics of Multisided Platforms.”

    Ten other economists who have studied ride-hailing agreed that the growing industry, which UBS estimates to be a US$40 billion market, has room for at least two successful players, and perhaps a few smaller ones.

    The industry, they said, has none of the elements that traditionally have enabled single companies to control a sector.

    If it is the first of its kind, a company can dominate markets that have huge infrastructure costs, such as putting up cell towers or laying pipes; a large workforce of employees with specialized skills; and customers who get locked into a service and have difficulty leaving for competitors.

    Ride-services, by contrast, are relatively cheap to start, depend on contract labor with no inherent loyalty or specialized skills, and have free apps that can be downloaded in seconds.

    “You may not want to try a new social networking site if your friends aren’t on it,” Evans said. “But you don’t care what app your friends use for ride-hailing.”

    The question of whether on-demand ride services will remain open to new players has vexed startups and investors since Uber started the industry seven years ago.

    Companies taking on Uber include Lyft in the United States, Grab in Southeast Asia, Ola in India and newer startups like New York City’s Juno. In the United States, in particular, part of Uber’s attraction to investors is the chance at grabbing the entire industry.

    In a statement, Uber said: “The ridesharing industry around the world is highly competitive and innovative. That’s good for riders.”

    Uber investor and board member Gurley argued that any competitor would need to pursue a different strategy — perhaps offering more luxury and high-end services — to successfully battle Uber in its strongest markets.

    When business magnate Carl Icahn invested US$100 million into Lyft in early 2015, he told media outlets he saw “room for two.”

    Chris Sacca, a prominent venture capitalist who invested in Uber, responded “This is a winner-take-all game,” on Bloomberg television.

    Lyft has hired an M&A firm and recently explored the possibility of acquisitions by several companies, a source familiar with the discussions said, and reports of a possible sale stimulated talk of whether it could compete with Uber.(SD-Agencies)