Your two favourite ride sharing apps Uber and Grab may soon come under one umbrella. According to a report by new tech publication KR Asia, Grab is in talks to acquire Uber’s operations in Southeast Asia. Citing sources from people familiar with the matter, the alleged acquisition is part of Grab’s effort to tighten its grip on the rapidly growing shared transportation sector in Southeast Asia. KR Asia, is the Southeast Asia extension of 36 KR, the largest tech media in China. Backed by prominent investors such as Alibaba’s Ant Financial, Gobi Partners, Baidu Video and more, the media outlet is among many keen followers of the tech development of Greater China and Southeast Asia.
Both Uber and Grab launched their operations in Singapore in 2013.
What followed after was years of land grab and rivalry between the two ride sharing companies in Singapore, and then Southeast Asia.
While Uber arguably had more operational advantage in the early days thanks to its global presence, Grab made that up by focusing on localisation efforts.
For example, recognising that a big portion of its riders do not have credit card, Grab allowed both cash or credit cards payment since the beginning.
Another regularly cited example is that Grab made active efforts to ensure that drivers are taken care of.
As many of its drivers are older and are unfamiliar with technology, Grab regularly held one-on-one tutorials at local coffee shops. Poorer drivers also received subsidies to purchase smartphones.
Last year, Grab claimed that it has a market share of 95 percent in third-party taxi-hailing and 71 percent market share in private vehicle hailing.
It also announced that it has completed 1 billion rides in Southeast Asia.
Uber on the other hand, did not divulge any numbers on its Southeast Asia’s operation.
Just as Uber conceded its China’s operation to Didi, the largest Chinese ride sharing company, it may not be a complete surprise to see the same thing happening in Southeast Asia.
The alleged acquisition of Uber by Grab may (hypothetically) be driven by a few factors.
According to a report on Reuters, “SoftBank will play a consolidating role” in all the ride sharing assets they have invested in, including Didi, Grab and Uber. Softbank sits on the board of both Grab and Uber.
“Doing a deal and combining the two businesses in Southeast Asia makes a ton of sense,” said the source close to Grab to Reuters.
Any deal will likely be similar to the one Uber struck with DiDi last year, in which it took a stake in the Chinese company and pulled out its own business, Reuter’s source added.
What this means is that, should the acquisition of Uber happen, Uber and Grab will retain the distinct brands, app and business operations, with the backend of the operations be merged.
For users like us, we will still be able to use both the apps, although the incentives via the discount codes will no longer be widely available.
Another factor motivating the possible acquisition of Uber might be financials.
Uber’s new CEO, Dara Khosrowshahi, said in November last year that Southeast Asia is “over-capitalised at this point”, and that is he “not optimistic that market is going to be profitable any time soon”.
With the exit of its Southeast Asia operations to Grab, Uber may be able to cut its losses and focus on its operations in cities where the economics make sense.
However, Dara ruled out the possibility of the merger with Grab then.
We have reached out to Grab for comments on the story.
Featured Image Credit: Wall Street Journal