Uber in the deep waters of South East Asia

It’s no secret that Uber has been the pioneer for ride-sharing apps. In Bangladesh, Uber’s biggest competitor for ride-sharing is Pathao. Uber might have started back in 2009, but its competitors weren’t too late to start. In its markets, Uber has to compete with companies such as Lyft, Didi Chuxing, Ola, and Grab.

It’s all over the news if you haven’t noticed it. Uber just sold its massive market in South East Asia to Grab; a local ride-sharing app. Why on God’s green earth would a Fortune 500 company sell to a “puny” South East Asian company?

Models stand beside Grab cars during the launch of the ride hailing-firm’s services in the country, in Phnom Penh on December 19, 2017. Southeast Asia’s top ride-hailing firm Grab launched services in the Cambodian capital Phnom Penh on December 19, as it looks to lock down regional domination against main rival Uber. /AFP PHOTO/Charly TWO

Grab isn’t as mature as Uber. It’s journey started three years after Uber in 2012 when Anthony Tan and Tan Hooi Ling, two Harvard classmates decided to enter the massive market of ride sharing in Malaysia; Anthony quitting his position as head of marketing in Tan Cheng Motors, a family-owned business and Ling quitting her job as a consultant in McKinsey & Company. Eventually it moved to Singapore, Phillipines and Thailand and today, the app has 3.5 million daily rides.

One would think that Grab, acquiring Uber’s market, would create a monopoly in South East Asian market for Grab; But Go-Jek, the fastest growing start-up in South Asia from Indonesia, decided to penetrate the market by expanding into three more countries as the CEO,¬†Nadiem Makarim thinks that it’s a great opportunity as there are fewer players within the landscape. Planning to expand into three more countries, an internal e-mail from Go-Jek specified that it aimed to set up it’s operations within Philippines within this year.

People may not have noticed it, but Uber is in deep waters for the worst of reasons. Last year, Uber sustained a $1.5 billion loss. Ironically so, because no other startup in history has raised more capital, operated globally and reached quite a lofty valuation as Uber.

Amidst a hailstorm of controversy, Uber’s former CEO resigned and was replaced with Dara Khosrowshahi. Dara understood that the Uber’s biggest market had little room for expansion, thanks to other services such as Lyft and Grab. Right after taking up the throne, Dara mentioned that the market in South East Asia might not see a better future, at least for the next six months.

Selling businesses in markets isn’t new for Uber. Back in 2016, Uber sold a majority of its operations in China to Didi, the latter acquiring a market of around $35 billion dollars. Why and how is this relevant? Sure, Pathao isn’t going to eat up the ride-sharing market in Bangladesh anytime soon. In fact, Uber’s bike ride sharing service, Uber Moto, caught up quite early. But Pathao is expanding to regions Uber Moto still hasn’t moved into. It’s fairly easy to say that micro-management isn’t Uber’s strong suit, and local startups are taking advantage of it. As a result, ride-sharing services around the world are currently engulfed in wonderful, chaotic anarchy, with an aim for national domination.

It is expected that after this move, Uber is trying to concentrate in its North American market – aptly so, as Dara previously worked for Expedia Inc., another company based in the US. But the market in the US isn’t settling down anytime soon, as Lyft’s plans for expansion is in order as well.

Uber is doing pretty good where it matters, and it’s nice to see that the new CEO acknowledges that holding its ground is more important than aggressive expansion. But innovation is what keeps tech companies alive, and while Uber might have plans like autonomous driving, those plans took a hit as the autonomous Uber project was recently banned in Arizona following a fatal crash.

One good thing Uber still has are its investors who are sure of its success even after the monumental losses suffered in last year’s third-quarter. With it, Uber still has funds to pull itself up. What the world waits to see is how they plan to navigate themselves out of the way of the graveyard of tech startups.

Leave a Reply