Grab-ing Uber
Beginning April 8, the Uber call app was no longer functioning for customers in Ho Chi Minh City, as well as in Thailand, Cambodia, Myanmar, Indonesia and Malaysia as Grab and Uber services were integrated as Grab. This follows the merger deal between Uber and its arch-rival Grab which is geared to make Grab a pan-regional digital lifestyle platform. Uber will get 27.5% stake in the combined company; 500 staff will transition to Grab, and its customers will be shifted over to Grab’s apps.
Nikkei Asian Review reports that Grab took control of the Uber app in Vietnam on March 26 and sent messages to Uber drivers and customers to download the grab app. Previous Uber users are treated as new customers of Grab and will be given fare discounts and promotional offers such as free coffee and movie tickets based on a credit point system. In Indonesia, 75% of Uber drivers had switched to Grab as of April 6.
Uber has been retreating from its Asian operations, ceding control of the China market to rival Didi Chuxing less than two years ago and last year, merging with Yandex’s ride-hailing business in Russia and the Caucasus. This move can be traced to Japanese tech conglomerate SoftBank which invested $9.3 billion in Uber and told the company to focus on its “core markets” in the US, Europe, Latin America and Australia.
The shutdown of Uber’s operations in Southeast Asia is not complete as Singapore and Philippine competition authorities are investigating the antitrust aspects of the deal. In Singapore, Uber will continue until at least April 15 while Philippine authorities mandated that Uber should continue in service until their anti-trust review (75 days per regulations) is completed.
The Philippine Competition Commission (PCC) after a 3-hour public hearing last April 5, said it will ask Uber and Grab to avoid practices that would reduce the business viability of parties involved, as well as avoid practices that would prejudice the watchdog’s power to review the transaction.
Even though the deal falls below the threshold of the PCC’s mergers and acquisitions review, the antitrust agency has used its power to start looking into the potential effects of the transaction, expressing concern that it would lead to “a virtual monopoly in the ride-sharing market”. PCC has tabled for discussion, among other measures, are maintaining the independence of the Uber and Grab’s business operations while the review is ongoing, refraining from imposing exclusivity clauses, and refraining from sharing any confidential information like pricing. In its FACEBOOK account, PCC has even asked the public to “let us know what you think of Grab’s acquisition of Uber”.
While agreeing with the PCC’s move to review the transaction to ensure that public interest is served, it is also necessary that business strategies which are being applied globally is not unduly delayed or hampered. The PCC should be as fast as Singapore in resolving the issue and should not use its full 75 days to review the deal.
The PCC should also consider that as Grab and Uber consolidates, any negative effects on consumers will provide an opportunity for other competitors to come in. Indonesia’s Go-Jek, which currently focuses on its home market, is gearing up to expand its ride-sharing services to neighboring markets. Alibaba Group Holdings is introducing its Alipay payment service to Southeast Asia and is broadening its delivery business, an easy step to ride-sharing.
In an increasingly globalized economy and with technology and creativity coming up with innovative solutions, competition is heightened ensuring that the customers’ interest will prevail.
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