There's a talk from Travis Kalanick recently on a podcast about this. It talks about the advantages of a startup vs an incumbent. My read is if a startup competes on price, the incumbent has no choice but to first let them gain a bunch of market share. It's too expensive for the incumbents to compete on price because a no-name startup is doing it. So they'd have to let you get relevant enough for it to make sense to compete on that axis.

I view it as a wedge to gain market share and later compete on something else.

Carving out market share and aiming for an acquisition exit is a valid win condition.

It also serves the consumers in the long run as it eventually will force competition and price reductions; effectively busting up price leadership dynamics.

This isn't commoditized because an incumbent has the market share, it's commoditized because there are dozens of providers in a crowded market. So what is likely going to happen is there will be a race to the bottom in terms of price.

PS - This is why I loathe advice from prominent software co operators. It's not one size fits all. Uber's strategy is going to be very different than Tesla's strategy which is going to be very different from Amazon's strategy.

unless the startup has gobs of free money how can they do this against an incumbent? note: nobody has gobs of free money anymore, except the incumbents. Startups competing on price is typically not a winning strategy, unless they have some technical advantage that shifts the price curve; subsidizing a move on it doesn't work.