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Apple gives a $1 B boost to Uber's Chinese arch rival Didi

Harshith Mallya
13th May 2016
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Apple Inc on Thursday announced that it had invested $1 billion in Chinese ride-hailing service Didi Chuxing, formerly known as Didi Kuaidi. Tim Cook, CEO of Apple, told Reuters that this move would help the company better understand the critical Chinese market. Another report from Business Insider suggests that the deal was closed in less than a month after the Didi Chuxing executive team visited Tim Cook at Apple headquarters in Cupertino on April 20.

 

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Story so far

Founded in 2012 by Cheng Wei, Didi Chuxing is estimated to have raised $4.42 billion in total funding so far across multiple rounds. Some of their investors include Softbank, Temasek Holdings and Tencent. After competing against each other, Didi Kuaidi and Kuaidi Dache merged together in Febraury 2015, with the combined entity being valued at $6 billion at that time.

Didi Chuxing, said in a statement that the funding from Apple was the single largest investment it has ever received. The company which dominates the ride-sharing market in China said that it completes more than 11 million rides a day, with a market share of over 87 percent for private car-hailing in China. Didi is also an investor in India's Ola.

Apple recently has come under pressure from Chinese regulators, with its online book and film services being shut down last month, and Cook is travelling to the country this month. So, the $1 billion investment comes as Apple is trying to reinvigorate sales in China, its second-largest market.

According to Reuters, the investment gives Apple a sizeable stake in Didi Chuxing, which is Uber's chief rival in China. Cook said in an interview that he sees opportunities for Apple, which has hired dozens of automotive experts over the past year, and Didi Chuxing to collaborate in the future.

We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market. Of course, we believe it will deliver a strong return for our invested capital over time as well.

In December 2015, Didi had entered into a global alliance with Ola, GrabTaxi and Lyft to take on Uber. As a result of the alliance, international travellers from India, China, SE Asia would be able to access 'local on-demand rides' by using the same application they used in their home countries.

On the other hand, Uber was reported to be raising a $2 billion funding round at a $62.5 billion valuation. According to a Wall Street Journal article from April 2016, Didi's current round values the company at a $25 billion valuation.

Uber is estimated to be operating in over 400 cities but China has been a tough market for them. In May 2016, Uber announced that it had tied up with Alipay, the third-party payment platform operated by Ant Financial Services Group to facilitate booking for Uber rides all over the world.

When asked if Didi Chuxing will be helping with Apple's soured relationship with the Chinese government, Didi's president Jean Liutold Business Insider,

The policy makers in China now have been more and more open now. There’s a good foundation that we can help each other in many ways.

Future plans

There are also reports and rumours that Apple is entering the driverless car segment and has tripled its R&D budget to $10 billion. While driverless cars may be Apple's long term vision, Cook told Reuters that Apple remains focused on the in-car experience with its CarPlay system that links smartphones to vehicle infotainment systems.

That is what we do today in the car business, so we will have to see what the future holds. The deal reflects our excitement about their growing business ... and also our continued confidence in the long term in China’s economy.

Website- Apple

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