How Apple Helped Didi Chuxing Outrun Uber in China

Michael - Cleveland

Well-Known Member
How Apple Helped Didi Chuxing Outrun Uber in China
Reuters AUGUST 4, 2016, 12:02 AM EDT

Apple’s $1 billion investment in Didi likely weighed greatly on the decision to merge, analysts say.

Apple’s AAPL 0.52% $1 billion investment in car-hailing app Didi Chuxing in May helped accelerate Uber‘s decision to agree a halt to a costly two-year battle with its rival in China, people close to the companies and analysts said.

Didi Chuxing Technology and UberTechnologies UBER 0.00% raised billions of dollars in funding and spent heavily on discounted rides as they slugged it out for drivers, passengers and market share in the world’s second-biggest economy.

Uber finally ceded this week, realizing it was no match for a cash-rich rival with the backing of three of the world’s largest technology giants. It agreed to give up its independence in return for a nearly one-fifth stake in a bigger Didi.

Didi raised far more money than Uber China—making China the first market whereUber‘s strategy of outspending its chief competitor faltered, pushing it to surrender. Apple’s support for the Chinese firm made it clear it would be difficult to beat Didi just through funding.

“The Apple investment is one of the factors that influenced the decision,” said a person close to the companies, who couldn’t be named because the discussions were private. “Both sides raised enormous amounts of capital. They were probably thinking this was going to escalate to nuclear warfare, which raised the question: do we really want to assure mutual destruction?”