China’s Antitrust Regulator Investigates Didi-Uber Deal
The ridesharing startup Apple has just invested $1 billion dollars in is currently under formal investigation by the anti-trust authorities, China’s Commerce Ministry announced on Friday, as reported by the Wall Street Journal.
The main reason the startup captured the attention of the anti-trust regulator is that Didi has recently announced it will acquire Uber’s Chinese assets. The deal needs a review, according to government officials.
Didi’s $28 billion valuation propelled the company to one of the world’s most valuable startups, surpassing Airbnb and Snapchat. Still, when announcing UberChina’s acquisition, Didi said neither the startup nor Uber had yet made any profit.
Didi also said it doesn’t need to apply to the regulators, because UberChina’s revenue is below the $60 million (400 million yuan) “turnover” threshold that triggers an antitrust review. As it turns out, “turnover” is a pretty vague word in China’s antimonopoly law, and it can be interpreted as either revenue or transaction volume. UberChina’s transaction volume was above $60 million, but Uber counts its share of each fare as part of its revenue.
There is no mention of suspicion, and although the deal triggered an antitrust review, that doesn’t necessarily mean the deal is in violation of China’s antimonopoly law, according to Lester Ross, Beijing-based attorney with U.S. law firm WilmerHale, speaking with the WSJ.