
Uber Agrees on Southeast Asian Sale to Grab - cinquemb
https://www.bloomberg.com/news/articles/2018-03-25/uber-is-said-to-reach-agreement-on-southeast-asian-sale-to-grab
======
JumpCrisscross
> _SoftBank Group Corp., a major backer of Grab’s and Uber’s as well as
> China’s Didi Chuxing, has pushed consolidation to improve the profitability
> of a global ride-hailing business that bleeds billions of dollars a year_

The anticompetitive effects of common ownership [1] have been hypothesized in
respect of the public markets:

"A lot of the way we traditionally think about corporate governance does not
fully account for the fact that most investors are diversified. This comes up
a lot in mergers and acquisitions. Company A wants to buy Company B. If they
combine, they will have cost savings worth $X, and the question is how much of
$X goes to Company B shareholders in the form of merger premium and how much
of it goes to Company A shareholders. If you are a diversified investor
holding a proportional amount of both companies' shares, you don't care at
all. You just want the deal done. But because corporate law, at least in the
M&A context, gives directors a duty to maximize value for their shareholders,
Company B will negotiate hard to get as much of the premium as possible. Money
will be spent on bankers and lawyers. Company A might be pushed to raise a lot
of debt to pay more, making the benefits of the deal riskier (for Company A).
And Company B might ultimately just say no to a deal because it doesn't like
how the benefits are split, denying those benefits to diversified
shareholders. By maximizing value for its shareholders, considered as its
shareholders, Company B might actually be hurting those same shareholders,
considering their entire portfolios." [2]

One doesn't find Fidelity going out and saying "you two should merge so you
can raise prices on consumers." But I guess that's okay if you're Softbank?

[1]
[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427345)

[2] [https://www.bloomberg.com/view/articles/2015-04-16/should-
mu...](https://www.bloomberg.com/view/articles/2015-04-16/should-mutual-funds-
be-illegal-)

~~~
baybal2
>"you two should merge so you can raise prices on consumers."

This is pretty much it. A generic strategy for most of "megafunds"

~~~
WJW
Given that prices are now so low that the service is unprofitable, it does not
seem all that irresponsible for the firms' owners to want prices raised?

~~~
jessaustin
Yes, the fact that customers are basically paid to ride even at this late
stage means that the question of survival isn't really about individual firms
so much as about the category altogether. When this was the case for satellite
radio, Sirius and XM merged, which was a good thing even though it meant
prices would rise.

------
no1youknowz
Not surprised. After watching this video [0], my conclusion was that there are
no actual rides sharing companies in the world. There is only SoftBank.

As an aside, Lei does some awesome videos on technology and definitely worth a
subscription!

[0]:
[https://www.youtube.com/watch?v=OfFX9iKZAj0](https://www.youtube.com/watch?v=OfFX9iKZAj0)

~~~
trisimix
[https://medium.com/@steve.yegge/why-i-left-google-to-join-
gr...](https://medium.com/@steve.yegge/why-i-left-google-to-join-
grab-86dfffc0be84)

That guy would disagree I think.

~~~
htormey
“In August 2017, Grab raised US$2.5 billion in series G funding from Softbank,
Didi, and Toyota.[47”

[https://en.m.wikipedia.org/wiki/Grab_(company)](https://en.m.wikipedia.org/wiki/Grab_\(company\))

------
sarreph
I remember coming to SE Asia a couple of years ago, and finding it amazing how
I could order an Uber with the same app / account that I do in the West
(albeit only from major, supported cities).

However, returning recently, for me (at leat anecdotally) it’s almost
infeasible to order an Uber here now due to their low driver rates. Grab seems
to be everywhere, but with rates similar to Uber, I do wonder what went wrong.
I was thinking only the other day that it feels like Uber let this opportunity
slip through their fingers.

Both platforms are vastly cheaper than their western services ($1 for over a
mile). They also both offer ‘moto’/motorcycle hire for one-person rides which
is extremely convenient... I’m wondering why we don’t have similar services in
the built-up western cities such as London or New York.

~~~
freddie_mercury
(I live in SE Asia.)

Grab did a better job of having an offering that fit the local markets,
whereas Uber tried to fit its US model here. It has since adapted but Grab has
always executed faster and better.

Grab showed up front pricing first. Grab allowed paying by cash. GrabPay has
been (somewhat) adopted by other companies.

~~~
thisrod
There's another thing I heard lots of people saying in KL a few weeks ago.
Uber had developed a reputation for employing crooks—drivers who would accept
a fare and claim the payment, but simply not show up, and so on—and not doing
anything when they were reported. Grab was supposed to be a lot stricter with
its drivers, and their drivers were much more trusted.

~~~
freddie_mercury
I dunno. I don't live in KL. Uber is fine where I live. Grab is also fine.

------
sfifs
In pushing for these sales, SoftBank appears to be valuing Uber and other cab
hailing business as taxi businesses and aiming to improve profitability by
reducing competition rather than as a precursor to gain marketshare for some
kind of driverless taxi fleets. The insiders don't seem to subscribe to the
breathless enthusiasm of online commentators who have long considered Uber's
current model as merely a stepping store to driverless fleets.

~~~
ghaff
Because that's all they are. Uber and its competitors provided a valuable
service in demonstrating what a modern taxi service ought to look like (at
least from a customer perspective). But now that they've raised that bar, they
don't provide a lot of added value other than as a worldwide integrated brand
(in the case of Uber specifically).

Whenever door-to-door self-driving eventually arrives, it won't be in a
timeframe that's remotely interesting to current investors in these services.

~~~
notahacker
And that's particularly true of South East Asia, where human driver costs are
negligible and differences in road networks and driver behaviour create all
sorts of interesting new challenges for self driving software even if it
handles California near perfectly.

~~~
ghaff
Those are good points. If I have trouble imagining self-driving vehicles
navigating Boston at rush hour, it truly boggles the mind to imagine them
making it around Bangkok, Jakarta, or KL. I'm an experienced driver and I
wouldn't want to.

And, as you say, while a lot of people probably overestimate the driver cost
as a percentage of a taxi ride in developed Western countries, it truly is
almost negligible in Southeast Asia. It's very common for people to have full-
time drivers.

~~~
tomkit
In a lot of SEA and EMEA markets road signs, signals, traffic lights, etc. are
often non-existent, wrong or broken. Intersections may have 10-20 signs all
oriented in a non-standard position.

Throw in motorists and bicyclists that are constantly swerving between lanes
and inches from cars. Seeing current videos of how self-driving cars react, it
would constantly be jerking in different directions.

There are also lots of local habits that self-driving cars would need to be
trained to do, eg in Nepal when in a two lane and you spot an oncoming car,
you turn on your right blinker to signal you see each other and can pass
safely.

~~~
philliphaydon
What are these 'lot' of SEA markets?

~~~
richardknop
I think probably countries like Indonesia, Singapore, Malaysia, Philippines,
Vietnam, Thailand, Cambodia etc

------
nicolas_t
Pity, the repeated discounts from grab and uber making trips almost free will
quickly be a thing of the past...

I like it when inventors subsidize my life style in an effort to get market
share. Hope gojek can become a competitor in the markets I go to so that those
discounts start again.

------
samfisher83
Here is a list of company softbank has invested in: Ola, Grab, Didi Chuxing,
99.

[https://qz.com/1187144/softbank-not-uber-is-the-real-king-
of...](https://qz.com/1187144/softbank-not-uber-is-the-real-king-of-ride-
hailing/)

Softbank/Saudi Arabia is going to control the global taxi market.

------
fatjokes
As someone who recently had a bad experience with Didi in China, I really wish
there would be at least two competitors for each industry at any given point.

~~~
JulienSchmidt
China still also has Dida Pinche.

But I agree, before Uber left the Chinese market, there was more pressure to
be customer friendly. And the regular promos (with ridiculous amounts of free
rides) where also nice from a customer perspective.

------
woadwarrior01
I get a sense of deja vu with this deal, and previously the Didi deal in
China. It's very reminiscent of how Yahoo ended up holding a large chunk of
Alibaba stocks.

~~~
skinnymuch
Also Uber merging/making a joint venture with Yandex in Russia and a few local
countries where they got 1/3 of the company.

------
paulbjensen
I'd love to see Uber's income statement - they've grown fast but are they
profitable yet, and how much of their revenue comes from subsidised rides?

~~~
JumpCrisscross
"Uber said it lost $1.1 billion in the last three months of 2017 on revenue of
$11.05 billion — results that reflect a steady improvement in the company’s
financial position, with revenues growing and losses narrowing. In the
preceding quarter, Uber lost $1.46 billion on revenue of $9.7 billion. Uber
said it lost $1.1 billion in the last three months of 2017 on revenue of
$11.05 billion — results that reflect a steady improvement in the company’s
financial position, with revenues growing and losses narrowing. In the
preceding quarter, Uber lost $1.46 billion on revenue of $9.7 billion.

...

Based on a financial earnings criteria excluding expenses like stock-based
compensation — a significant portion of how Uber rewards its employees — the
company said it lost $475 million in the fourth quarter compared with a loss
of $607 million in the prior three-months period."

[https://www.nytimes.com/2018/02/13/business/uber-earnings-
ip...](https://www.nytimes.com/2018/02/13/business/uber-earnings-ipo.html)

~~~
paulbjensen
Thanks. Starting to wonder how much cash in the bank they have.

------
grizzles
Anyone know how this works in practice? Is Grab somehow able to rebrand the
Uber app with Google/Apple's blessing? I'm really curious.

~~~
cinquemb
Uber sent out an email for people to download Grab, since it will no longer
work in SE Asia after the 8th of April[0].

Personally, so far, I'm not impressed with grab's software and epayments
infrastructure in Indonesia, compared to uber where I can use my card and pay
for any of my wifes/friends usage without having to think about things like
topping up or buying credits (though to be fair, a lot of platforms in
Indonesia [maybe even SE Asia] seem to have the same situation regarding
payments, with worse software). Maybe this will change, but right now it feels
like a demotion.

Here's to hoping a decentralized platform for ride hailing can come into
existence in the future and remove the reliance on SoftBank's will to unify
the market on their terms.

[0]
[https://help.uber.com/h/1e6cfc45-10da-416c-a7a3-d13f75505c34](https://help.uber.com/h/1e6cfc45-10da-416c-a7a3-d13f75505c34)

------
rajacombinator
So what is Uber’s thesis these days? Global taxi monopoly is dead. Self
driving cars is dead. Time to dump this dog in an IPO and hit up the buyer of
last resort ... America’s 401ks.

------
kjsingh
So is Grab going to take over Uber in India?

~~~
skinnymuch
I don’t think there’s any chance of that. Uber is only getting 27.5% of Grab.
Uber has roughly 50% of India’s market. Grab has basically none of it.

------
aprao
Anyone think Uber vs. Ola will go down the same path?

~~~
skinnymuch
Eventually perhaps. There are differences for now. Namely this battle is
mostly or only in India. And Uber has around half of the market share. With
SoftBank owning 30% of Ola and 15% of Uber, I’m sure they’ll want
consolidation.

------
bocahrokok
And now grab vs gojek

