Uber strikes back at Didi and Lyft’s global alliance

Ronny Kerr · May 3, 2016 · Short URL: https://vator.tv/n/452f

New partnership with AliPay allows 450 million customers to hail and pay for Uber in 68 countries

Editor's Note: Our annual Vator Splash Spring 2016 conference is around the corner on May 12, 2016 at the historic Scottish Rite Center in Oakland. Speakers include Tom Griffiths (CPO & Co-founder, FanDuel), Andy Dunn (Founder & CEO, Bonobos), Nirav Tolia (Founder & CEO, NextDoor), Mitch Kapor (Founder, Kapor Center for Social Impact); Founders of Handy, TubeMogul, VSCO, Vinted; Investors from Khosla Ventures, Javelin Venture Partners, Kapor Capital, Greylock, DFJ, IDG, IVP and more. Join us! REGISTER HERE.

You honestly expected a (reported) $62.5 billion behemoth of a company to stand by and watch its smaller competitors steal its market share?

Uber this week announced an expanded partnership with AliPay, an online payment platform operated by Chinese e-commerce company Alibaba Group.



Initially, this partnership allowed riders in China to pay for their Uber rides through AliPay. In this much broader integration, AliPay’s 450 million active users can now—directly through the AliPay app—hail and pay for rides in any of the 68 countries where Uber is live.

The move leapfrogs Uber’s ridesharing competitors around the world, who in the last few months of 2015 assembled an alliance to make it easy for their customers to hail rides in different countries. Integrating Didi Kuaidi in China, Lyft in the U.S., GrabTaxi in Southeast Asia, and Ola Cabs in India, the alliance allows any customer in one region (say a Lyft customer in the U.S.) to continue using their app of choice in a different region (China) by hailing cars from the partner service (Didi). All of this is meant to happen in the background.

While the alliance seemed like a clever move to stem Uber’s growth abroad, it relies on country-by-country integrations, and so far only four have been confirmed. In one fell swoop, Uber has granted nearly half a billion individuals the ability to hail an Uber anywhere in the world using just one app.

Interestingly, though Alibaba clearly has a hand in helping Uber here, the company is playing both sides of the field. The massive tech company invested in Lyft as early as April 2014 for its $250 million round of funding. This isn't uncommon, especially when you’re investing in companies with services this extensive. For example, Alibaba Group Holding and Ant Financial (an affiliate of Alibaba) recently invested $1.25 billion in Ele.me, a Shanghai-based food delivery platform. If (or when) UberEATS lands in China, the platform would compete directly against Ele.me.

In addition to thwarting its competitors’ alliance, it’s likely that Uber also hopes its new integration with AliPay will help it gain some ground in the ridesharing battle over China. This past January, Didi Kuaidi announced that it booked 1.43 billion rides in 2015, more than Uber has done since its founding.

But a month later, Uber CEO Travis Kalanick criticized Didi for running at a steep loss everywhere in China to corner the market:

“We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.”

At the time, Kalanick said Uber was profitable in the U.S. but was losing over $1 billion a year in China. As such, it’s safe to assume the company will either have to try something different or raise some new funds—reports say the latter is in process.

Support VatorNews by Donating

Read more from our "Trends and news" series

More episodes

Related Companies, Investors, and Entrepreneurs

Uber

Startup/Business

Joined Vator on

Uber is a ridesharing service headquartered in San Francisco, United States, which operates in multiple international cities. The company uses a smartphone application to arrange rides between riders and drivers. 

Lyft

Startup/Business

Joined Vator on

Lyft is a peer-to-peer transportation platform that connects passengers who need rides with drivers willing to provide rides using their own personal vehicles.