Uber's Two Biggest Competitors - In China and US - Form Global Alliance

It's unlikely that the Lyft-Didi alliance will overtake Uber, even with the potential addition of additional partners in India and Europe.

But that's not necessarily the point. When you remain a private company like Uber with a putative valuation of @$50 billion, your financial status is dependent on exorbitant growth to meet the expectations of your investors. In that situation, even slowing your ascent is a serious threat.

But of potentially greater concern, given the significant role Chinese companies are playing in this effort, it is conceivable that they believe this is an industry in which they can become a globally dominant competitor. And yes, that could be a problem for Uber. JL

Leslie Hook reports in the Financial Times:

The Lyft and Didi partnership will include collaboration between their technology and product development teams, and cross-regional marketing efforts. Users of Lyft and Didi will be able to hail rides with the other company’s drivers when they travel to China and the US, respectively.
Two of Uber’s biggest competitors have formed a global alliance, presenting the San Francisco-based ride-hailing company with its most formidable competition to date.

Lyft and Didi Kuaidi, the biggest Uber competitors in the US and in China respectively, will allow each company’s customers to use the other’s services when travelling, as a part of a broader co-operation agreement.

This year Didi also invested $100m in Lyft, in a financing round led by Rakuten that included Chinese internet groups Alibaba and Tencent. Uber is the world’s largest ride-hailing company in number of countries served, but recently it has faced increasing competition from homegrown champions operating in specific markets.
The tie-up is the first major co-operation between ride-hailing companies in different countries, and more are expected to emerge.

Didi is the largest ride-hailing company in China by number of daily rides, and has been strengthening ties with Uber’s competitors around the world. This year it invested in GrabTaxi, which is based in Southeast Asia. “Didi’s strategy is to work with local champions,” said Jean Liu, Didi president. “We do not rule out any possibilities.”

The threat posed by Uber’s rapid expansion and its well-funded war chest has raised the stakes for local competitors in markets ranging from China to India and Southeast Asia.
Lyft has been in talks with Indian ride-sharing company Ola about possible co-operation, a move that would further strengthen the global alliance, according to a person familiar with the matter.
However, John Zimmer, Lyft president and co-founder, declined to comment on the talks. “We have talked to a lot of people,” he told the Financial Times. “Each market in each country deserves to be looked at distinctly.”
In the Chinese market, Didi’s local and regulatory expertise were particularly valuable, he said.
Competition between Uber and Didi in China is fierce, as they fight for market share among the 800m urban dwellers. Uber plans to invest $1bn in its Chinese services this year. Meanwhile, Didi reported losses of more than $500m in the first five months of this year, according to documents seen by the Financial Times, implying annualised losses of $1.4bn.“Uber is a good competitor, but we feel really good about our position in China right now,” said Ms Liu, pointing out that Didi held greater market share than its US competitor.
The Lyft and Didi partnership will include collaboration between their technology and product development teams, and cross-regional marketing efforts.
Starting early next year, users of Lyft and Didi will be able to hail rides with the other company’s drivers when they travel to China and the US, respectively.
This will give Lyft access to the growing number of Chinese tourists in the US — about 3m last year — and will give Didi access to the roughly 5m US tourists visiting China annually.