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Didi’s acquisition of Uber China throws the global anti-Uber alliance in doubt

Didi is now literally more invested in Uber than it is in Grab, Lyft and Ola combined.

Asa Mathat

Didi Chuxing, China’s homegrown ride-hailing startup, was the glue that held together the global anti-Uber alliance that included Lyft, Grab and Ola. But now that Didi has acquired Uber’s China operations, that partnership has been thrown into doubt.

In addition to a $1 billion investment Didi is making into Uber, the deal also brings Uber CEO Travis Kalanick onto Didi Chuxing’s board and Didi Chairman Cheng Wei onto Uber’s board. Both Kalanick and Wei are non-voting members of the board.

That means, as of last night, Didi Chuxing is more invested in Uber’s success than it is in the alliance. Didi, so far, had invested about $100 million in Lyft, $350 million in Grab and $30 million in Ola, altogether about $480 million, less than half of what it just invested in Uber.

Some of the partners in the alliance were blindsided by last night’s news, a source said. Lyft, Uber’s chief competitor in the U.S., and Ola, India’s dominant ride-hail player, have been left to determine what that means for their relationship with Didi, according to sources.

That’s because, though there were reports of investor pressure on both Uber and Didi to strike a deal as of July, sources say Didi assured its partners several weeks ago that such a deal would not happen.

In other words: While Uber’s investors may have pushed for it, Didi’s decision to acquire Uber came together abruptly.

It’s not hard to believe partners were shocked, especially when considering Didi’s president Jean Liu was knocking Uber’s service in China as recently as June during Recode’s Code Conference.

But the tables turned, and they turned fast. As part of Didi’s acquisition of Uber China, Uber will receive close to a 20 percent stake in Didi.

For Lyft, which has a long history of competing against Uber in an important market, Didi’s acquisition of Uber China complicates things a tad more than it does for Grab and Ola. Lyft and Didi shipped the first consumer-facing aspect of their international alliance in April. As part of the global anti-Uber alliance, each company agreed to launch a cross-booking platform where, for example, a Didi user could hail a Lyft in the U.S. without switching apps.

Now the company is in the middle of trying to figure out what this means for its partnership with Didi and what Uber’s stake in Didi means for Uber’s relationship with Lyft.

“We always believed Didi had a big advantage in China because of the regulatory environment,” Lyft spokesperson Alexandra LaManna told Recode. “The recent policy changes are exactly why we did not invest in the region. Over the next few weeks, we will evaluate our partnership with Didi.”

As for Ola, a source close to the company insists it’s business as usual since Didi is a minority investor in Ola and the company hasn’t launched any products as part of its partnership with Didi as of yet. For now, it’s too early to tell whether the companies will continue to partner, the source said.

When asked about the sudden nature of the news, the source close to Ola pointed to Ola’s acquisition of TaxiForSure, which came together in a little more than a week, and said it wasn’t uncommon for these types of deals to come together quickly.

Uber may have thrown in the towel in China, but now it can focus on the next biggest markets in the region, India and Southeast Asia, as well as in other parts of the world, including Latin America, the Middle East and North Africa.

In an email to employees, Grab CEO Anthony Tan said Didi’s victory over Uber was a good sign for the company’s business in Southeast Asia. The letter reads like a rallying cry, with Tan readying his troops to fend against the resources Uber is now freed up to pour into Southeast Asia.

“With the deal in China, we expect Uber to turn more attention and divert resources to our region,” Tan wrote in his note to employees. “But we have seen that when the local champion stays true to their beliefs and strengths, they can prevail.”

Even so, Grab will continue to partner with Didi, which includes rolling out a cross-booking platform with the company. In a statement, Tan echoed what he wrote to his employees: The acquisition of Uber China was a victory for Didi Chuxing and it means local players can, and will, win.

“Our internationalization strategy remains the same as before, to bring roaming availability to our users wherever they travel to,” Tan said in a statement.

Ola, on the other hand, thinks it’s unlikely Uber will double down on its investment in India, according to a source close to the company. India, the source insisted, is as diverse if not a more diverse market than China and requires a local approach. Uber’s loss in China, the source said, is a testament to the fact that local markets can’t be infiltrated by a foreign company with an international blueprint.

(For those keeping score, that also makes strange bedfellows out of Tencent, Baidu, Alibaba, Apple and Google, among others.)

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