Become a MacRumors Supporter for $25/year with no ads, private forums, and more!

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

MacRumors

macrumors bot
Original poster
Apr 12, 2001
50,471
11,857



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.


"The Apple investment is one of the factors that influenced the decision," a person close to the companies told Reuters on condition of anonymity. "Both sides raised enormous amounts of capital. They were probably thinking this was going to escalate to nuclear warfare, which raised the question: do we really want to assure mutual destruction?"
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
 

Scottsoapbox

macrumors 6502a
Oct 10, 2014
988
3,783
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:
 
  • Like
Reactions: thisisnotmyname

GrumpyMom

macrumors G3
Sep 11, 2014
9,203
13,205
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:
 
  • Like
Reactions: amegicfox

mattymatt843

macrumors newbie
Jun 18, 2015
3
1
I wonder if Uber reached out to Apple for investments before Apple invested in Didi... That's a huge blow.
 

Gasu E.

macrumors 601
Mar 20, 2004
4,634
2,663
Not far from Boston, MA.
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:


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.
[doublepost=1470316494][/doublepost]
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:


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.
 
  • Like
Reactions: GrumpyMom

man3ster

macrumors member
May 12, 2009
82
150
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.
 

GrumpyMom

macrumors G3
Sep 11, 2014
9,203
13,205
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.
[doublepost=1470316494][/doublepost]


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.
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.
 

citi

macrumors 65816
May 2, 2006
1,363
508
Simi Valley, CA
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.

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.
 
  • Like
Reactions: Gasu E.

sw1tcher

macrumors 68000
Jan 6, 2004
1,840
2,609
Nice one, Apple.

Now how about investing in HP so they can make Skylake MacBook Pros for us.

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.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.