>> So how will this business generate billions of dollars in profit?

It doesn't. At least, not from people paying for rides. I suspect Uber will have to start leveraging their passengers. Either they are going to start hitting them with ads, as taxis have done for years, or become yet another source of consumer data.

I imagine a possible nightmare scenario whereby Uber starts charging people other than passengers. Venues such as nightclubs could be asked to contribute else their customer base not get rides home.