Is Uber Conceding Southeast Asia to Grab?
Uber is one of the first ever ride-sharing start ups which had its start in 2009 as UberCab. The company began its rise into the spotlight a year later with the launch of their mobile app; Uber continued its rise to prominence in 2012 with the launch of their UberX ride-sharing service.
However, in recent years, the company has faced its share of dramatic and public ups and downs including the dismissal of its Founder and CEO, Travis Kalanick over accusations of inaction over reported sexual harassment in the organisation. That said, the ride-sharing service has continued its march to reinvent and dominate the ride sharing space. In Malaysia, this has taken the form of the numerous “CUBA UBER” billboards and ads which have popped up.
Yet, even with Uber’s increased marketing efforts, it looks like things aren’t going that well for the company in Southeast Asia. News is beginning to surface that the US-based ride-sharing company is in talks with Southeast Asia’s largest ride-hailing company, Grab, to sell its southeast Asian business for a stake in the company. Grab has been Uber’s main competition in the Southeast Asian region since its official launch of its GrabCar service back in 2014 after 2 years as a taxi hailing app. In the time since, Grab has announced its dominance of the Malaysian and southeast Asian markets while Uber has remained mum.
This would not be the first time that Uber has considered such a move. In fact, the company has, in 2016, sold its business in China to the country’s leading taxi-hailing app, 滴滴出行 (Didi Chuxing) for a stake in the company. It has also recently consolidated its operations in Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan under Yandex Taxi for a similar arrangement. That said, should Uber pull out of the Southeast Asian region, that would leave Grab open to possible anti-competitive proceedings which could get increasingly sticky. For Malaysia, at least, there is no viable ride-hailing alternative to Grab and Uber; meaning Ubers concession of the market would make Grab the only ride-hailing app in the country. Of course, this discounts the numerous taxi-hailing apps that have popped up over the years.
“The amount we’re investing in developing markets is a significant negative but that’s an optional investment,…We think it should be on and it’s gonna be on for a while. And the big bets, autonomous [driving and other bets], increase the negative. If someone says forget about all this stuff, all I want is the core and sell all the stuff, you’d have a business for a quarter was cash flow break even. I’m pretty darn confident we can turn the knobs to even on a full basis profitable if we wanted to, but you would sacrifice growth.”
– Dara Kosrowshahi, CEO of Uber
That said, the company’s move doesn’t come as a surprised as it continues to work towards its IPO in 2019. Under the leadership of new Chief Executive Officer (CEO), Dara Kosrowshahi, the company has been consolidating its efforts and trying to rid itself of its recent negative image. The company has also been under pressure by investors to turn a profit in recent years ahead of the planned 2019 IPO.
Also published on Medium.