Li Junfen

Commenter

On August 1, Didi and Uber, the two largest car e-hailing platforms in China, announced they had concluded a strategic cooperation agreement. Didi and Uber agreed to acquire and own shares in each other, effectively becoming each other’s minority interest shareholders. This cooperation agreement could easily lead to a potential monopoly in the car e-hailing business. The quasi-merger will greatly reduce the competition for Didi, and as a result, it is possible that the company will raise price to improve its profit margin. In such case, if the government also sets a floor price for e-hailing services, it will make things worse. The competitive advantage of e-hailing services will all but disappear, and the real losers will be the passengers. The decision is detrimental to the long-term development of the industry.