The after-effects of Uber and DidiChuxing merger

By : |August 2, 2016 0

Uber is selling its Uber China arm to arch rival DidiChuxing in exchange for a 20 percent stake in the merged operation. But the deal has raised some unnerving questions from Didi’s old allies like Lyft, Grab, and Ola. The number two ride-sharing app in the US, Lyft has said that it will reconsider its partnership with DidiChuxing after the latter’s announcement that it is acquiring Uber China’s operations.

“We always believed Didi had a big advantage in China because of the regulatory environment. The recent policy changes are exactly why we did not invest in the region,” said Lyft in a statement to Fortune, referring to the country’s recent legalization of ride-hailing. “Over the next few weeks, we will evaluate our partnership with Didi,” the company added.

Lyft and Didi have been partners since last December, when the two companies formed what was widely viewed as an anti-Uber alliance, along with Ola and Grab, the largest ride-sharing apps in India and Southeast Asia, respectively. The team-up was meant to stalk Uber’s growth in Asia, while also bolsteringLyft in the US and preventing a global takeover by the aggressive Uber.

This partnership allowed Didi customers to use their app to hail a Lyft driver when traveling in the US, and vice versa for Lyft users in China. But that now seems unsettled after Didi and Uber announced their merger.

However, Didi’s latest deal with Uber which values the combined company at $35 billion, raises serious existential questions for Lyft, which has been struggling to gain sufficient market share in the US.

Uber and Didi may not be competitors anymore, but Lyft and Uber still do. And that’s also the case for Grab in Southeast Asia and Ola in India.

The merger is sure to have big ramifications for India too. With Uber’s management no longer obsessing about China, or at least not the same degree as before, it can now double down on India. Last summer, Uber had pledged to invest at least $1 billion into its India operations to compete with local rival Ola. Ola hasn’t commented on the deal as yet.

Grab, however, doesn’t look much unnerved. “Didi’s success over Uber in China strengthens our conviction that rideshare is a local business, and local champions will emerge as winners,” Grab co-founder and CEO Anthony Tan said in a statement. “Our internationalization strategy remains same as before, to bring roaming availability to our users wherever they travel to,” he added.

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