The Anti-Uber Alliance Grows: India's Ola Joins Lyft-Didi

Think of it as a global game of Monopoly: sometimes thwarting your competitor's desire to grow is as important as growing yourself. The situation also brings to mind the old line about one lawyer in a town starving, while two lawyers in a town get rich.

The question is whether Uber's valuation can be maintained now that it faces serious opposition , especially as the market for on-demand services may be peaking since they are now touting ride-sharing as are Lyft and Didi. Whether either of the competitors will ever be profitable remains to be seen. JL

James Crabtree and colleagues report in the Financial Times:

The deal will involve joining an arrangement in which Lyft and Didi Kuaidi’s customers will be able to use their existing apps to access the other company’s taxi services while travelling abroad. The alliance will also involve the three companies sharing market intelligence on Uber’s growing activity, as well as developing new technology.
India’s leading ride-sharing service Ola is set to join a global anti-Uber alliance in a sign of deepening ties between rivals of the San Francisco-based company, according to people familiar with the situation.

Ola is in advanced negotiations to join the alliance established last month between Didi Kuaidi and Lyft, Uber’s main rivals in China and America, in a move that will see Uber face co-ordinated competition in its three most important global growth markets for the first time.The move follows the announcement last week that Didi, which has taken the lead in forming the alliance, had invested an undisclosed amount as part of Ola’s latest funding round, which is expected to raise around $500m at a valuation approaching $5bn.

The most tangible part of the deal will involve the Bangalore-based group joining an arrangement in which Lyft and Didi Kuaidi’s customers will be able to use their existing apps to access the other company’s taxi services while travelling abroad.
However, the alliance will also involve the three companies sharing market intelligence on Uber’s growing activity, as well as developing new technology, joining Didi and Lyft’s earlier plans for “in-depth collaboration between their technology and product development teams”.

Ola’s decision to join the alliance follows Uber’s rapid growth in India over the past year. Although Ola remains the country’s largest ride-hailing company, its lead has come under pressure following Uber’s decision to invest $1bn into the market by the middle of next year.

Uber’s rivals have been laying the foundation for their partnership over recent months through conference calls between senior executives at the three companies, as well as with Malaysia-based GrabTaxi, which operates around Southeast Asia. GrabTaxi declined to comment.
The growing alliance is also likely to help Uber’s rivals develop new services, for instance to compete with UberPool, the carpooling service Uber launched in San Francisco but recently began rolling out in countries such as China and India.
Lyft and Didi recently launched pooling services of their own, known as Line and Hitch respectively. Ola, which is backed by SoftBank of Japan, has so far only said that it is developing a similar service. Ola declined to comment.Didi Kuaidi also declined to comment, but has previously said that its strategy for global expansion involves working with pre-existing homegrown champions, all of which happen to be in large markets where Uber is also expanding.

The Chinese company, which has a valuation of around $15bn and is backed by internet giants Alibaba and Tencent, has also used its financial muscle to forge ties with other Uber rivals, investing in both Lyft and GrabTaxi, as well as last month’s Ola deal.

Jean Liu, president of Didi Kuaidi, said in New York last month that success in the ride-sharing business requires “strong local expertise”.
“Didi’s strategy is actually to work with the local champions, the country champions, together,” she said. This co-operation could range from technology exchange to investment partnerships, she added. “We do not rule out any possibilities.”