Apple Helped Drive Uber Out of China

| News

Uber and Didi were locked in a battle to outspend each other in China in hopes of becoming the dominant name in the ride sharing market. When Apple invested US$1 billion in Didi, however, Uber knew that strategy wouldn’t work and agreed to a deal where Didi bought out its Chinese operations.

Apple and Uber in China

Apple’s Didi investment was a catalyst for the Didi/Uber buyout

Didi and Uber announced a deal earlier this week to merge their operations in China and Uber will own about 17 percent of the new company. The deal makes Didi the big name in China’s ride sharing market, and gives Uber more cash to invest in its growth outside of the country.

The two companies had been talking off an on for months about a possible merger, but when Apple made its investment in Didi, the writing was on the wall. That, coupled with investments from Tencent and Alibaba, made it clear to Uber that the winning financial backing had gone to Didi. That was the catalyst pushing the companies into their recently announced deal.

“The Apple investment is one of the factors that influenced the decision. Both sides raised enormous amounts of capital,” an insider source told Reuters. “They were probably thinking this was going to escalate to nuclear warfare, which raised the question: do we really want to assure mutual destruction?”

Since mutual destruction wasn’t palatable to either company, they found a middle ground that works for both. Didi gets a big slice of China’s ride sharing market, Uber gets to keep its fingers in the pie, and neither company implodes. The deal also means Uber doesn’t need to keep using profits from other markets to keep its business in China afloat.

Didi’s new relationship with Uber could also be an opportunity for Apple. Project Titan, Apple’s rumored electric car project, is reportedly working on autonomous driving as well—a feature that could be enticing to both Didi and Uber. Removing human drivers from the business equation will cut down on expenses and likely improve efficiency, and could be a lucrative market for Apple’s car.

Regardless of Apple’s actual car plans, it seems the company is already finding ways to disrupt the market—and it still hasn’t confirmed a car really is in the works.

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