Apple’s surprise $1 billion investment in Chinese ridesharing service Didi Chuxing in May turned out to be decisive in the competition against UberChina, people close to the companies have told Reuters.
As the news outlet points out, there was an ongoing fund raising rivalry between the two ridesharing services in China. Didi and Uber raised billions of dollars and spent heavily on discounted rides in an effort to gain market share in the country.
August brought a dead end to the competition between the two: Uber China lost, as Didi agreed to acquire all the Chinese assets of Uber.
The reason, the Reuters reports uncovers, is that Uber ultimately realized it could not compete with its rival, because it is backed by three of the world’s biggest technology giants.
Didi is backed by Alibaba, Tencent, and, since May, Apple. Didi’s market valuation is estimated at $35 billion after the acquisition of Uber’s Chinese assets.
“The Apple investment is one of the factors that influenced the decision,” said a person close to the companies, who couldn’t be named because the discussions were private. “Both sides raised enormous amounts of capital. They were probably thinking this was going to escalate to nuclear warfare, which raised the question: do we really want to assure mutual destruction?”
As it turns out, rumours of Uber selling its Chinese business surfaced many months ago, but Uber CEO Travis Kalanick dismissed those claims in March, when he said he was committed to China for the long term.
Didi and Uber started discussing a potential partnership about three months ago, but Apple’s $1 billion investment announcement finally decided the fate of those talks. The result is what Didi announced on the first day of August.