The most popular ride-hailing service in the world, Uber, is retreating from the South East Asian market. The company has sold its ride-hailing and food delivery services to its biggest regional rival, Grab.
Uber will still keep a 27.5% stake in the business with Grab and Uber CEO, Dara Khosrowshahi, will join Grab as a board member.
Grab is a Singapore-based ride-hailing company with operations in eight different countries – Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam – making it South East Asia’s biggest ride-hailing service.
Uber and Grab
Both Uber and Grab executives marked the deal as a win for everyone, including their passengers. However, experts have anticipated that prices may increase as competition will decrease in the region. Uber invested a total of $700 million in the region, however from the sale, it seems that Uber’s plans didn’t bear fruits.
This deal markets Uber’s third retreat worldwide. The company withdrew its business in China in 2016 by selling off to a local company named Didi – after investing $2 billion in the market. Uber also sold its business operations in Russia to a local firm Yandex in 2017.
Uber’s CEO, in November 2017, told that Uber’s business in Asia is somewhat skeptical in terms of profits and it is not going to be “profitable anytime soon”.
From this sell-off, it seems like Uber is giving up competition in the overseas markets. Uber’s CEO sent an email to his staff saying;
One of the potential dangers of our global strategy is that we take on too many battles across too many fronts with too many competitors.
This is the first ever consolidation deal under Uber’s new CEO. However, Khosrowshahi says that there won’t any deals of such kind in the future. He said;
It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.
The CEO added that Uber will now work on a “growth that comes from building the best products, services and technology in the world.”
Uber has been surrounded by controversies lately, as the company last year lost $4.5 billion in 2017 due to several incidents including its ex-CEO’s involvement in a harassment case.