Baidu to buy US$600M stake in Uber
Baidu will be procuring a minority stake in Uber Technologies worth as much as US$600 million, according to the China National Radio which broke the news late last week. The new partnership will give both companies a boost, as the San Francisco-based ride-hailing app company strives to expand in the world’s most populous country while the largest Internet search engine in China will be able to expand its myriad services and compete with similar ones already available in the country. There has yet to be any official statement from Baidu, but the company is set to make an announcement on 17 December about “an investment with a US startup that is a household name.”
Uber’s presence in China is thus far limited to eight of its largest cities, including Shanghai, Beijing and Guangzhou, but the numbers are promising. In the first six months of launching in Shanghai, the number of bookings exceeded the numbers achieved in New York, Paris or even its home base, San Francisco, during the same span of time. A local player like Baidu would be able to guide the American company in navigating the Chinese market and also ward off government interference, which Uber has had its share of in recent weeks after being sued, shut down and banned across the world. So, a strong partner in the world’s largest economy would be the support that the ride-hailing company desperately needs or, at the very least, the additional funds would help pay off its legal fees.
For Baidu, a ride-booking app would open up another opportunity to tap into the 500 million smartphones wielded by the good folks of China. Presently, Alibaba and Tencent each claims half of the ride-hailing market share – with the Kuadi Dache and Didi Dache apps respectively – after fighting a price war earlier this year with discounts for riders and incentives to attract drivers. Baidu-Uber’s entrée into the market could potentially upset the balance once more, but they would have to work doubly hard to wrest users and drivers away after entering the market so late in the game. Didi already has more than 100 million registered users and one million registered taxi drivers in more than 300 cities; bookings through its app have reached as many as 5.2 million in a day. Furthermore, Kuadi and Didi both work only with licensed taxi cabs, and with recent headlines of Uber’s unlicensed drivers being charged with murder, violence and rape, users will think twice…nay, thrice…about using Uber.