Apple's Huge Investment in Didi Chuxing Was Behind Uber China Deal

Discussion in ' News Discussion' started by MacRumors, Aug 4, 2016.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Over the weekend we reported that Chinese ride-hailing service Didi Chuxing had agreed to acquire the Chinese operations of rival Uber in a deal worth $35 billion.

    In a Reuters story filed yesterday, sources close to both companies revealed that Apple's $1 billion investment in Didi Chuxing was the driving factor in Uber's decision to agree to the deal, in return for a one-fifth stake in a bigger Didi.


    According to the sources, Didi raised far more money than Uber China, which was forced to subsidize its operations in the country using profits it had made in the U.S., Canada, and about 100 cities elsewhere. The company's relinquishment of its independence in China marks the first failure in Uber's strategy of outspending its biggest competitors.

    In June, Didi secured $7.3 billion in funding from investors including Apple, China Life Insurance Co Ltd, Ant Financial and other new shareholders, giving the company a $28 billion valuation that made it the world's third highest-valued start-up.

    The company says it now has $10.5 billion in available funds, thanks to backing from Chinese Internet giants Alibaba Group Holding and Tencent Holdings.

    "Apple's investment in Didi likely spurred Uber to think harder about doing some kind of deal here," said Jan Dawson, an Uber analyst at Jackdaw Research. "Uber and Apple have been partners in other markets, so for Apple to side with Didi must have been something of a red flag that things weren't going to go Uber's way."

    According to Hans Tung, a managing partner at GGVCapital (which backed Didi), Uber is eager to secure a wider partnership with Apple beyond its current relationships, such as Uber passengers' use of Apple Pay to pay drivers who use iPhones provided by Uber. Opportunities may open up for such a partnership, said Tung, now that Uber has agreed the deal with Didi.

    Article Link: Apple's Huge Investment in Didi Chuxing Was Behind Uber China Deal
  2. japanime macrumors 68000


    Feb 27, 2006
    Every time I read or hear the name "Didi Chuxing," I'm reminded of this song. :D

    Everybody have fun tonight, everybody Didi Chuxing tonight!
  3. rekhyt macrumors 65816

    Jun 20, 2008
    Part of the old MR guard.
    Probably going to take a while until Uber will IPO then.

    Because it'll be shorted by HFs the moment it enters public market.
  4. Scottsoapbox macrumors 6502a


    Oct 10, 2014
    Yes it wasn't the $2B Uber had lost operating in China or the $11B Didi war chest that pushed the deal. It was the fact that 9% of Didi's funds came from Apple. :rolleyes:
  5. anthorumor macrumors 6502a

    Jun 16, 2009
    Sydney, Australia
    Nice one, Apple.
    Now how about investing in HP so they can make Skylake MacBook Pros for us.
  6. GrumpyMom macrumors G3


    Sep 11, 2014
    I need more coffee to follow this soap opera. All I am able to absorb at the moment is that it is really hard to break into the Asian market. I will return later after I'm done with my landscaping gig and hopefully more awake. Meanwhile will someone who can get their brain cells to function this early tell me if I understood correctly that Apple basically screwed over Uber to get in good with China? Or is that an over the top reading of it? Have mercy on me, I've been up since 5 with indigestion. :confused:
  7. mattymatt843 macrumors newbie

    Jun 18, 2015
    I wonder if Uber reached out to Apple for investments before Apple invested in Didi... That's a huge blow.
  8. Kaibelf Suspended


    Apr 29, 2009
    Silicon Valley, CA
    I'd rather HP fix their own trackpads before they wreck Apple's manufacturing. Your computer works perfectly well in the meantime.
  9. thisisnotmyname macrumors 68000


    Oct 22, 2014
    known but velocity indeterminate
    Uber doesn't need to "reach out" to attract investment. Uber's been attractive to capital for a very long time now. And Apple and Uber have partnered in the past (taken directly from the initial post).
  10. Gasu E. macrumors 601

    Gasu E.

    Mar 20, 2004
    Not far from Boston, MA.

    Yes, it's an over the top reading. China is a difficult market, with government tendrils in everything. Uber is just being realistic; if anything, they made out reasonably well even to get a piece of this. Uber is a smart company and Apple's investment was just a signal to them as to how this was going to play out, not the driving force. Uber is already challenged fighting local governments across the globe, on at a time; the Chinese government is multiple orders of magnitude more formidable. The good new for Uber is that becoming part of this bigger entity will mean they don't have to fight the city-by-city battles with vested transportation interests.
    --- Post Merged, Aug 4, 2016 ---

    Uber is smart enough to read the signs, of which Apple's investment was a rather big and glowing one. It's a matter of a company readjusting their strategy based on new information.
  11. man3ster macrumors member

    May 12, 2009
    This doesn't sound right. This appears to be insider trading on Apples part. There should be an investigation on whether Apple knew this deal was going to happen before Apple made the large investment. If they knew this, that is illegal activity and should be held accountable.
  12. guerro macrumors regular


    Jul 18, 2002
    Parts Unknown
    When is a ransom not a ransom? When it's an "investment".
  13. GrumpyMom macrumors G3


    Sep 11, 2014
    Ah thanks. It's well past noon and my brain is still not working after baking in the hot sun as I pulled and dug out a weed taller than me with a taproot the size of my forearm. :eek:

    Oh well, all's well that ends well. Sounds like everyone made out alright on this deal.
  14. Michaelgtrusa macrumors 604

    Oct 13, 2008
    The west has done a good jobs in creating china companies that screw you in the end.
  15. citi macrumors 65816


    May 2, 2006
    Simi Valley, CA
    That's not how insider trading works and Uber is not publicly traded. Apple has every legal right to make an investment. Uber was trying to get into the market not be absorbed into it.
  16. sw1tcher macrumors 68000


    Jan 6, 2004
    But HP doesn't "make" any of their computers. They contract out their manufacturing to the same handful of Taiwanese companies (i.e. Quanta, Foxconn, Pegatron, etc.) that almost everyone (including Apple) uses.

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15 August 4, 2016