Much has been written about the low approval of the current President and the general disgruntlement of the population despite conventional economic measures being good. The unemployment rate is low, wages are rising, and inflation is abating. The most logical explanation is that while the rate of inflation is slowing prices are still higher than before and while unemployment affects a few, high prices affect everyone. I think this is correct but one thing that doesn't seem to be mentioned is that one of the reasons prices are higher and in some cases much higher is that many of the tech sector services that people relied on like ride share and food delivery were basically giving away their goods for free before and now they are not. Companies like Uber, DoorDash, and Grubhub were never profitable and were kept afloat by unlimited venture capital money, especially from SoftBank, and now this subsidy is gone. Now if you want a ride or get food delivered, you're going to have to pay full price and this has made a lot of people really unhappy.
The subsidy was premised on the Silicon Valley idea that all start-ups need to "scale" until they are a virtual monopoly (like Amazon, Google/Alphabet and Facebook/Meta). However, the one thing that these tech strategists seemed to not consider is that scaling is useful when getting bigger means getting better, either by having lower cost, acquiring more data, or exploiting network effects. Scaling can work for search and entertainment companies because the more users there are the more data you have to determine what people want. It works for social network companies because the more people there are on the network, the more other people want to join that network. However, it doesn't really work for delivery and transportation. Costs do not really decrease if Uber or DoorDash get bigger. You still need to pay a person to drive a car and the more miles they drive the more it costs. It could possibly scale if the cars were bigger and drove on fixed routes (like public transportation) but no one has yet to figure out how to scale point-to-point services. The pitch was that the tech companies would optimize the routes but that essentially means solving the "traveling salesman problem" which is NP-complete (i.e. cannot be easily solved and gets exponentially harder as the size gets bigger). Thus, while these tech companies got bigger they just burned through more cash. The primary beneficiaries were us. We got rides and food for next to nothing and now that's over. However, it was not all costless. It hurt existing industries like traditional taxis, which were heavily regulated. One of the greatest failures in oversight was letting Uber operate in New York but that is another story.
Now these companies are either going bankrupt or increasing their prices. It is true that inflation is partially responsible for ending the subsidy because it led to higher interest rates which made borrowing more expensive but the reckoning would have to come sooner or later. Technological idealism does not obviate the laws of physics or capitalism - all businesses need to make money.
