Finally, Grab is buying Uber Southeast Asia, as we had predicted.
Softbank probably pushed hard for this deal, before and after its US$10 billion investment into Uber a couple of months ago.
What are the implications to the market, the users, Go-Jek, and mobile payment development in the region? Here are some of our thoughts:
- Integration takes effort – however, as the drivers and [installed] users are highly overlapping, there is not much to integrate.
- If past experience of Didi-Kuaidi & Didi-Uber mergers had anything to offer, the integration can be very, very fast.
- Most of the Uber team who will be transitioned to Grab might not last (long) in Grab.
- For loyal Uber users, there will be a culture shock for a few days. But life goes on.
- This will probably not have any immediate impact on Go-Jek, as Uber has been pretty trailing far behind in Indonesia, especially in the two-wheeler market.
- However, Grab needs to finish off Go-Jek – as it can’t afford to lose in Indonesian market. The job will soon become easier as they can concentrate their firepower.
- Which means in order to be strategically safe, Go-Jek would probably lobby the government harder, and also go out attacking other markets Grab is active in.
- Another threat Go-Jek faces stems from investment (and investors) – it needs to constantly rake in big rounds to fend off Softbank portfolio’s onslaught. The patience and commitment of its existing investors will be tested. An eventual Grab – Go-Jek merger might be possible.
- Apart from Go-Jek, Grab will not have any significant competitor in the sector – they already mitigated the threat of Didi’s direct entry through enlisting them as a major shareholder. However, experience in China shows that if the sector is lucrative, there will be challengers.
- Government could be a blocker – in Singapore the authorities has already said any deal between Uber and Grab will be under scrutiny. In Vietnam the current Transport Minister probably favors taxi companies over Grab/Uber. We do believe some governments will look to Singapore to set policy precedence.
- Grab will probably also put a lot more effort on its payment & fintech services. That market in most of Southeast Asia still remains messy, with lots of players vying to replicate the success of Alipay in China.
- It will probably remain messy for a while. But if GrabPay eventually wins the market, this is what might happen.
