Dec. 4, 2014: Uber, the mobile-phone-based car service, is getting bigger. The company said today that it had raised another $1.2 billion in funding in a round that values the firm at a remarkable $40 billion (thus post-funding the firm is worth $41.2 billion). At 5 years old, the company now has a valuation on par with that of giants like Time Warner Cable and Prudential Insurance.

But will the rich valuation prove justified? Will it one day earn the enormous profits that investors are betting on by putting in money on those terms? While many of the headlines around Uber focus on its questionable customer privacy practices and battles with local taxi regulators, the bigger long-term economic question is one we addressed in June, the last time Uber raised money.

That article is below, updated only to reflect the latest valuation.

Most of the headlines about Uber, the rapidly growing transportation service, involve its battles to do business in more cities around the world. Not surprisingly, cabdrivers who have enjoyed being part of tightly regulated cartels in cities like Madrid, Miami, London and Los Angeles do not much care for the San Francisco-based upstart that brings them new competition.

But whether Uber will ultimately become the kind of wildly profitable company that will justify the valuation of $40 billion reportedly assigned to it by its latest funding round [this was $18.2 billion in June] doesn’t come down to those regulatory battles. If the recent past is a guide, it will eventually win them.