Apple-Backed Didi Chuxing to Purchase Uber's Ride-Hailing Operations in China

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Jul 31, 2016.

  1. MacRumors macrumors bot

    MacRumors

    Joined:
    Apr 12, 2001
    #1
    [​IMG]


    Chinese ride-hailing service Didi Chuxing is set to acquire the Chinese operations of rival Uber in a $35 billion deal, reports Bloomberg and The Wall Street Journal. Apple notably invested $1 billion in Didi Chuxing back in May, giving Apple access to data and expertise on electric and autonomous car technology, as well as a foot in the door with the Chinese investment community.

    [​IMG]
    As noted in a forthcoming blog post by Uber CEO Travis Kalanick that was obtained by Bloomberg, neither Uber nor Didi Chuxing has turned a profit in China despite billions of dollars in investment, and combining operations will help smooth the path to profitability and a sustainable business.

    Apple is of course widely rumored to be working on its own car-related project dubbed Project Titan, an effort that is an "open secret" in Silicon Valley according to Tesla CEO Elon Musk. The most recent developments with Project Titan include a new chief in veteran Apple executive Bob Mansfield and a new focus on autonomous driving software that could give Apple flexibility beyond plans to build its own vehicles.

    Article Link: Apple-Backed Didi Chuxing to Purchase Uber's Ride-Hailing Operations in China
     
  2. x0vash0x macrumors regular

    Joined:
    Dec 1, 2014
    #2
    Interesting. Literally just downloaded Uber in China. Good to know the APP will still function.

    People have said Uber is better than Didi but I've yet to use either.
     
  3. bmunge macrumors 6502

    Joined:
    Mar 7, 2012
  4. thisisnotmyname, Jul 31, 2016
    Last edited: Jul 31, 2016

    thisisnotmyname macrumors 68000

    thisisnotmyname

    Joined:
    Oct 22, 2014
    Location:
    known but velocity indeterminate
    #4
    I'm confused. $35BB sounds like Didi was producing $35BB in cash and equity stake but then it states $35BB combined value with $1BB against a $68BB valuation. So did they purchase Uber China for $1BB and then revise Didi's cap up to $35BB based upon the acquisition? That's not a $35BB deal.

    edit: or are there two deals going on here, Uber China receiving 20% stake in Didi per the headline deal and Didi making a separate $1BB infusion to Uber (as in the US parent) against a $68BB valuation (of the parent)?

    edit 2: read the non-paywall article, the first edit is correct. This is 1) a merger of Didi with Uber China to continue operating under Didi brand and management; for this merger Uber China stakeholders will receive a 20% share of the merged entity. 2) Separately but possibly (likely?) related, Didi making a $1BB investment in Uber USA at a $68BB valuation (about a 1.5% stake of Uber USA). I'm not in M&A but I'd call that an $8BB deal (or $7BB and $1BB deals).
     
  5. T'hain Esh Kelch macrumors 603

    T'hain Esh Kelch

    Joined:
    Aug 5, 2001
    Location:
    Denmark
    #5

    Thanks. The article was really confusingly written, and your post made it much more clear.
     
  6. sw1tcher macrumors 68000

    sw1tcher

    Joined:
    Jan 6, 2004
    #7
    Sounds like Apple just invested in Uber to me.
    --- Post Merged, Aug 1, 2016 ---
    [​IMG]
     
  7. iZac macrumors 68000

    iZac

    Joined:
    Apr 28, 2003
    Location:
    Shanghai
    #8
    The problem with Didi is that the regular dirty taxis use it, but with Uber you're more likely to get a clean (private) car. The downside is that at least Taxi drivers know where they're going, but Uber drivers often just blindly follow the map until they get confused by one-way systems.

    I recently managed to get Alipay to work and started using Uber again. I'm sure I used to be able to search in english and set destinations with a pin before, but now I need to write the destination in Chinese characters.
     
  8. sudo1996 Suspended

    sudo1996

    Joined:
    Aug 21, 2015
    Location:
    Berkeley, CA, USA
    #9
    This is true in Los Angeles. I feel annoying acting as a back seat driver, but if I don't, these guys get lost. And whatever navigator they're using stinks here. It thinks some one-way streets are two-way and thinks the entrance to every address is in the alley.
     
  9. ryanwarsaw macrumors 68020

    ryanwarsaw

    Joined:
    Apr 7, 2007
    #10
    Anyway you cut the cookie it is confusing. :)
     
  10. Benjamin Frost Suspended

    Benjamin Frost

    Joined:
    May 9, 2015
    Location:
    London, England
    #11
    Great.

    Uber is a despicable company with the ethics of Google, and Apple is now a part of that.

    I'm trying to remember when Apple last did something that surprised and delighted me; perhaps it was the Cookie Monster ad.

    Thank goodness for small mercies.
     
  11. GrumpyMom macrumors G3

    GrumpyMom

    Joined:
    Sep 11, 2014
    #12
    Why is Uber despicable? I don't know anything about them other than you can hire a ride through the app. An old friend of mine mentioned he drives for them but he's never said much about it. He got sick for a month and I had to give him some money so his utilities wouldn't be cut off. So I am guessing their drivers don't get much in the way of benefits and I've been a little worried about that for his sake. But again, we didn't discuss it because he's been through a lot and so we stick to other topics.
     
  12. Benjamin Frost Suspended

    Benjamin Frost

    Joined:
    May 9, 2015
    Location:
    London, England
    #13
    They don't vet their drivers and flagrantly flout taxi laws in the UK.
     
  13. GrumpyMom macrumors G3

    GrumpyMom

    Joined:
    Sep 11, 2014
    #14
    Oh goodness! I had better check what they do in the U.S.
     
  14. snebes macrumors 6502a

    Joined:
    Apr 20, 2008
    #15
    The same thing here.
     
  15. Kaibelf Suspended

    Kaibelf

    Joined:
    Apr 29, 2009
    Location:
    Silicon Valley, CA
    #16
    So Uber is "despicable" and Apple is "part of that" because they invested in a rival company. Makes total sense.

    :rolleyes:
     
  16. rdlink macrumors 68040

    rdlink

    Joined:
    Nov 10, 2007
    Location:
    Out of the Reach of the FBI
    #17
    They do, in fact vet their drivers. So that's a total lie.

    As far as "flouting taxi laws in the UK," I have no direct knowledge of what you're referring to. But I do know how it's gone in several large cities here in the US. Uber comes into a city and disrupts the status quo, which was a regulatory agency that protected a cloistered business (sanctioned cabs) that was essentially screwing over their clientele, and providing lousy service. Many cities' cab regulatory agencies, which were actually basically in the back pockets of the two to four "sanctioned" cab companies tried to pass new regulations that would have essentially outlawed Uber, and taken us back to the time when the oligarchy of cab companies would still have a stranglehold on the market. But in most cities the antiseptic of public scrutiny beat back the cronyism, and the customer now gets a choice.

    Uber is not a perfect company. And as with any new and disruptive player in an established industry there are going to be hiccups and things to sort out. But they are not a "despicable company," and I would rather get in an Uber any day than ride in almost any taxi in the US.
     
  17. RightMACatU macrumors 65816

    RightMACatU

    Joined:
    Jul 12, 2012
    Location:
    192.168.1.1
    #18
    Personally all I see in these shared economy "transactions" is another bubble. Anyone who had $ invested in high tech in the late 90s should get what I mean ;)
     
  18. 2457282 Suspended

    Joined:
    Dec 6, 2012
    #19
    Two points -

    1. I prefer Lyft and use it exclusively. Have not been happy with the Uber experience and probably never go back. This point is slightly off topic so I am done.

    2. I still do not see american companies succeeding in China. The rules are different and seem to change to the advantage of the Chinese companies. I think this is the best for Uber in that they can get something back for their investment. Apple continually loses court cases (most which seem very one sided) and is constantly at risk in China, even though that is where most of their manufacturing lives. American companies, IMHO, have yet to figure out how to maneuver in this strange system and few succeed. This may be an unfortunate but case study on how to succeed -- start a company, wait for the chinese to copy, and then sell to them for a profit and move on.
     
  19. wigby macrumors 68000

    Joined:
    Jun 7, 2007
    #20
    Guess what? Taxi companies don't vet their own taxi drivers either and break their own laws. In the U.S., riding in a taxi vs. Uber is night and day. I'll take a clean ride with an english speaking driver anyday over what traditional yellow cabs offer (all drivers on their phones during entire ride and a jars or urine stashed under their seats-no joking).
     
  20. Zaren macrumors regular

    Zaren

    Joined:
    Jul 21, 2000
    #21
    The best part about this article is that they show two app icons, but I have no idea what either of them is supposed to represent. I've never used Uber before, and have honestly never even seen the app, so I have no idea which icon is for which app.
     
  21. x0vash0x macrumors regular

    Joined:
    Dec 1, 2014
    #22
    So, there are quite a few successful American companies in China. A lot of them are in the service and manufacturing industry, even the entertainment industry is relatively successful as long as artists don't wade into political issues.

    The issue is technology companies, and really its a tit-for-tat battle. America refuses to let Huawei robust access to the American market on 'national security concerns' so China does the same to U.S technology companies. Part of it is letting domestic technology companies lead the way (i.e. infant industry argument) another is national security reasons. Apple is an interesting case. Apple's hardware business isn't at risk in China (China isn't going to ban Apple products). But, it's services (iCloud, iTunes, ext.) all must comply with Chinese laws. The court cases its losing are more a show of force than anything long lasting and basically a warning shot to Apple rather than anything more. Apple is actually a really successful company in China, despite what click-bait articles might suggest, any Anti-Apple protests are short-lived and have zero support from the vast majority. It's a way to show patriotism more than anti-americanism or anti-american company.

    Uber was pretty successful in China and rivaled Didi pretty well. The trouble is that both companies aren't earning much money so consolidation is a step towards profitability. Even before this, Uber and Didi were technically illegal, but the CCP turned a blind eye for the most part. So, this isn't so much about Uber not being successful in China because it's an American company, more about consolidating and monopolizing the market rather than competition.

    And, honestly, it wouldn't surprise me Apple were involved in these talks somehow. This could be a huge round-about way to get access to mapping data and self-driving car technology. It's not secret Uber and Didi are investing in self-driving cars, along with Baidu and other Chinese companies. Plus, remember that time Apple invested $1 Billion in Didi and then Didi invested $1 Billion Uber... That's just a coincidence, right?... It couldn't be Apple playing a long-con...could it? No... Never! Companies are honest, and straightforward and trustworthy!
     
  22. thisisnotmyname macrumors 68000

    thisisnotmyname

    Joined:
    Oct 22, 2014
    Location:
    known but velocity indeterminate
    #23
    We'll have to be careful or this will end up in PRSI (which I guess is true for a lot of threads these days, probably says something about us). Uber is a political lightning rod for those who have strong opinions about unions and for those concerned about the changing nature of our economy via the use of technology. Those who strongly favor the protection of unions view Uber as a threat as they are making a very large and rapid dent in traditional taxi service (which in many areas is heavily union). Uber drivers are not "employees" but rather independent contractors using Uber's service as a sort of lead generation tool, connecting their "business" with potential customers via the app. Since in this framework they operate as a small business Uber doesn't have to provide things like health insurance or sick days, aspects of employment that these workers would have if they were employed directly by a transportation company (e.g. taxi company). If you look at Uber's history this all makes sense, they started by trying to pitch themselves as a lead service to the traditional taxi companies providing them with current technology in exchange for a cut (finder's fee) but the taxi companies passed. They then decided the model could go direct and anyone could become a member of Uber receiving these requests and driving independently. The flip side to this is that depending upon how much control you attempt to exercise over the workforce, employment law can classify you as an employer even if you work strictly with contractors (there are ongoing lawsuits with franchise models as well as Uber and others about this topic). If a business were to require employees to be present every day 9-5 and wear their uniform and provide specific policies and procedures for them to adhere to etc... eventually the law just says "you are employing that person so all employment law applies to you." As opposed to the traditional contractor approach of, "here's an objective and my requirements for the goal now you'll get there for X compensation." It can be a very fuzzy and broad line between the two but those with an emotional investment either way feel that Uber is most definitely in one camp or the other.

    What I've just described, along with Uber's huge success, has made them the poster child for what's been dubbed the "gig economy." The way in which some people work (and many of those may prefer to work) is on a gig basis, much like the traditional form of contracting. To proponents this is like a buffet, they can pick and choose a combination of tasks (sometimes very small like an Uber ride or sometimes much larger like a months or years long project) and have flexibility in both the type of work they do and schedule. This *can* involve higher payment than 9-5 "w2" work but also generally comes with expenses (freelancers need to provide their equipment for the job in many cases) and could be lower net after tax implications (1099 workers are responsible for the full set of taxes [payroll tax] w2 workers typically aren't aware of because their employer pays them on their behalf) etc... The other side of this arrangement is that a "gig" worker isn't going to have the traditional set of benefits (health insurance, paid time off for vacation or sick, retirement plan, etc...) that traditional employment has provided. The latter has many people concerned.

    Finally, Uber has a history of viewing existing laws on taxi services as protectionist or back door revenue generators for the local governments that enacted them and as a result has taken a strategy of just disregarding those laws in the hopes of becoming popular enough to force change. In some cases they've just openly paid fines for their drivers if they were caught and continued right on until specific action was taken in cities (or countries) to outright ban them. In any case, explicitly violating laws (although not criminal, typically ordinances) is shady but again there are two very different perspectives in place here. To the Silicon Valley technolibertarian those laws are protectionist for an entrenched oligopoly and the only way to get a foot in the door is to violate them until the masses support you and demand change (Uber becomes incredibly popular with customers almost every it goes and has a long history of achieving that change if it operates long enough). To the labor/union supporter they are an evil group bringing in low cost scabs and pushing out traditional jobs and their strategy of ignoring ordinances is another arrow in Uber's opposition's quiver.

    There's no black and white in any of this. Some of the anti-Uber claims are just laughable (early on the big push was that taxis are regulated and thus safe but Uber's unregulated vehicles would be death traps, I use Uber on a regular basis and every vehicle I've been in has been clean and sound unlike the many taxis I used prior that rattled and shook with every acceleration or brake, many of those were down right scary). Some of their claims have merit (they've now shifted to more focus on the status of the workers and broader implications of a widening gig economy, whether or not that frightens you becomes more of a philosophical debate).

    Full disclosure, I am a regular Uber customer and very much enjoy the service. As someone who travels frequently and dealt with the horrible state of traditional taxies prior to Uber's existence I'm very happy they have come to be and now would rather walk than take a traditional taxi. Hopefully I've stated everything here from a neutral perspective though.
     
  23. 2457282 Suspended

    Joined:
    Dec 6, 2012
    #24
    Very well stated response. Thank you!
    --- Post Merged, Aug 1, 2016 ---
    Very well stated. I support these types of companies coming in and shaking things that need shaking (full disclosure I am a lyft loyalist, not Uber). As you stated, the monopoly that the taxis had on cities created many problems -- the conditions of some of those cars was scary and in many places I have traveled would not accept credit cards. Even with the laws today, many taxis will ask where you are headed before they let you in the cab and refuse service if they don't want to go there. In many places where Uber and Lyft now operate, I have noticed a marked improvement from the taxi services that now must compete. And that to me is a good thing.
     
  24. Glideslope macrumors 603

    Glideslope

    Joined:
    Dec 7, 2007
    Location:
    A quiet place in NY.
    #25
    Agree 100%. :rolleyes:
     

Share This Page

40 July 31, 2016