Uber Technologies Pvt. Ltd has decided to merge its China business with Didi Chuxing and hold a one-fifth stake in the new business, in a $35 billion deal. If the deal goes through, it could help close the ongoing price war in the market.
Uber’s move also comes at a time when the California-based company was grappling to pioneer in terms of market share with the local market leader.
“In my view, Didi - Uber deal is an consolidation in Chinese market and mainly to control price war which was not helping either of them,” Anil Joshi, Managing Partner at Unicorn India Ventures.
What does it mean for India?
But what does it mean for this deal mean for the global market and India’s very own Ola Cabs? Didi Chuxing is an investor in Ola and both share a common investor in form of SoftBank.
The deal, which comes with a $1 billion investment made by the Chinese ride-sharing pioneer in Uber, couple of months after i-Phone maker Apple Inc invested a whooping $1 billion in the Didi.
According to experts, the deal coupled with the investments will add more fire power to help Uber focus on the Indian market. With the bragging China war now at a closure, the deal will help Uber sharpen its focus on Indian operations.
Uber has been dealing with regulatory issues in Bangalore - one of its biggest markets. Seperately, the company has also been in the news for investing in its own payment system and maps, which will help Uber to reduce its dependancy on PayTM and Google Maps respectively.
“This deal will definitely have repercussions in India. With Didi also having stake in Ola, the Indian taxi market will definitely see reduced aggression and more unit economics focused growth. Focus will be on growing revenues with the right margins rather than burning cash in the name of Customer Acquisition. Also with the establishment getting tougher on aggregators, you will now see a more united front fighting it out,” Rohit Fernandes, the Co-founder and CEO of Shippr.
Uber India declined to comment on the repercussions of this deal and investment on Indian operations.