Uber is letting go of its Southeast Asia operations to concentrate on its North America, Australia, and South Africa businesses.
This was the rumor that roiled newsfeeds recently in various permutations. Representative of them is a March 8 Bloomberg report, later picked up by blogs and news websites, that stated, “Grab, the dominant ride-hailing service in Southeast Asia, is close to finalizing a deal to acquire Uber Technologies Inc.’s business in the region and may sign a deal this week or next, according to people familiar with the matter.”
Under the supposed agreement, Uber would sell out to Grab and take a high teens to 20 percent stake in the latter, while other sources say up to 30 percent.
A decision on Uber’s part to divest its SE Asia operations would be an acknowledgment of Grab’s dominance of the market and a prudent attempt to cut losses. It would be a totally understandable business decision on Uber’s part. Grab has more than 81-million mobile app downloads and offers services in more than 178 cities across Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, and Thailand.
However, a report by Patrick Everett Tadeo carried yesterday on Yahoo! News Philippines belies the rumor.
Tadeo wrote: “As soon as the rumors of Grab’s planned buyout of Uber started to spread in January 2018, Carmudi.com.ph personally asked Uber Philippines government relations and public policy chief Yves Gonzalez if this was true but he merely laughed it off.
The rumors, however, still persisted, prompting the Land Transportation Franchising and Regulatory Board to ask Uber Philippines and Gonzales himself recently if this was true.
“According to the agency, Uber Philippines relayed Uber headquarters’ stand that it will not sell its Southeast Asian operations but instead will continue “to invest more” in the region.
“Uber CEO Dara Khosrowshahi himself dismissed the rumor on a recent visit to Asia in February 2018. According to Reuter.com, the Uber boss said that while the company expects to lose money in Southeast Asia, it is also planning to “invest aggressively in terms of marketing, subsidies, etc.”
“From a competitive standpoint, we think we can improve,” Khosrowshahi reportedly said. “We will look at anything… But right now the plan for Southeast Asia is to go forward, lean forward and to invest.”
“On the local front, LTFRB board member Atty. Aileen Lizada shared that Gonzales relayed the same information to her as well.”
For Uber riders and drivers, that’s good news. Because if Uber pulled up stakes, there would be adverse effects on the current ride-share industry.
Foremost that comes to mind is that Grab would have a monopoly over the ride-share business. While there are other services such as Angkas and Micab, their presence can hardly be felt. Grab and Uber are in number one and two position, reminiscent of the Coca Cola-Pepsi war.
Without Uber, there would no longer be the option of choice. The lack of competition would mean that the current system of variable fares, that change according to time and demand situations, will practically be under the control of Grab.
In my own experience over the past month, Uber fares have consistently been cheaper by P30 to P50, sometimes higher. Their app also matches me faster with a driver. But if I were to see a better price on Grab or if they were to get me a driver faster, I would take a Grab.
Nani, an Uber driver, was surprised when I asked him if he had heard the rumor. He hadn’t. “What will happen to us?” If Uber leaves, the livelihood of its drivers will be affected. They could be absorbed by Grab, but there are reasons, Nani said, why some drivers joined Uber, and if Grab will be the only ride-share service around, the only choices drivers would have will be to join or not join Grab.
Grab works better in some areas, Uber in others. Having a choice is better for consumers. And given the challenges faced by commuters daily in Metro Manila, we need all the transportation choices we can get.
Dr. Ortuoste is a writer and communication consultant. FB and Twitter: @DrJennyO