Uber is the most well-known, ride-hailing platform. But with regulators piling on the pressure, and the rise of competitors hoping for a slice of the Southeast Asian ride-sharing pie, Uber hasn’t had its own way – as we explain in this overview of key events that have shaped the region’s ride-sharing market as it is today.
We covered the Uber situation in another post. Take a minute to read it and you’ll learn that as of March 2018, Uber no longer operates in Southeast Asia. But the company hasn’t left the market altogether.
Uber struck a deal with Grab. It now owns 27.5% of Grab and is its biggest shareholder. This has left the Grab/Uber coalition with a monopolistic grip on the Southeast Asian market – almost.
Times are tougher than ever for other players. The deal leaves other contenders such as Go-Jek, Ryde and Ryde X, and Arcade City battling for a market share in a region that’s home to 8.6% of the world’s population.
Uber’s Disruptive Approach Gives Grab the Upper Hand – Bangkok, 2014-2018
Generally speaking, consumers view taxi services differently in the West, compared to how they’re perceived in Asia. In the West, ride sharing is seen as a cheaper alternative to traditional taxis. In Asia, however, where a city like Bangkok has cheap taxi licenses and over 140,000 registered drivers competing with each other, rides are already consumer friendly and low priced.
A traditional taxi journey in Bangkok will rarely exceed 100 Baht ($3.00 USD). This means ride sharing occupies a different place in the market. Rather than being a cheaper option, ride-sharing offers Asian customers a more convenient option they’re willing to pay for.
But the appearance of ride-sharing wasn’t received well by everyone. Uber, as it has done globally, utilised its disruptive approach – vexing regulators and taxi drivers’ unions by offering both unregistered and uninsured drivers the chance to make a living away from the traditional taxi-service model.
The rise of Uber in Bangkok added to the city’s traffic problem. There were plenty of reports of Uber drivers bending the rules and offering unsafe rides, while they were also being reported as rude to riders, accused of poor driving, and of rejecting passengers.
The local taxi drivers’ unions reacted. They mobilised. The unions, working together, insisted that ride-sharing companies be subject to the same legislation as the already-embedded taxi firms. Thailand Department for Land Transport (DLT) agreed. The incumbent military government, not wanting to incite protests during their reign, also sided with the taxi firms. Uber was already on the backfoot.
If the ride-sharing companies made so many enemies, how can passengers in Bangkok still use Grab?
What shook the startup world last year
It’s quite simple. While Uber was busy riling the authorities, Grab was much savvier. It read the political situation and offered a service that complemented the existing taxi industry. It made sure not to tread on the toes of drivers in a city where taxis – whether it was local firms, tuk-tuks or songathews – wield more power than Silicon Valley’s hottest and most ambitious start-ups ever envisaged.
Grab Acquires Uber’s Southeast Asian Operation — Singapore, March 2018
When Uber closed its operation in Southeast Asia in early 2018, it signed off with the following message:
“What this means for you: we will be transitioning our services over to the Grab platform by April 8, 2018, so all requests after that date should be made from the Grab app. However, you can still use the Uber app in more than 80 countries around the world”. Concluding with: “Thank you, and we look forward to continuing to serve your city with Grab”.
When being interviewed about the deal for CNBC Life, Grab CEO Anthony Tan said: “It is not just about us [Grab] becoming more profitable…we want the operation to also serve society”. This can be interpreted as their business improving/expanding upon existing operations, including GrabTaxi, GrabCar, GrabBike, GrabHitch, GrabExpress, GrabPay, and GrabFood.
There are two sides to Uber’s coup. First, the Singapore-based Grab feels privileged to be chosen by Uber to merge with its ride-hailing and food delivery businesses. Second, merging with Grab to become the biggest player seemed the only viable option for Uber.
The deal (referred to as a “tactical retreat” by The Economist), for an undisclosed fee, is more than a good compromise. The situation is a fallout from the regulatory scrutiny Uber has faced in Thailand, Singapore, Malaysia, and the Philippines. Therefore, as of April 2018, Uber isn’t available in Thailand. Uber’s CEO has joined the Grab executive board, meaning Uber is still pulling strings. The man on the streets of Southeast Asia’s megacities might think that because visitors and locals can’t hail Ubers, the company has been defeated. A little digging into the situation would reveal that this is far from the truth.
Has the Southeast Asian Ride-Sharing Saga Started All Over Again?
Grab did a better job of not antagonising the authorities. Uber, though, still wields power in the region.
Although it might seem like it, both companies lack a full-on monopoly; there are other players in Southeast Asia looking to expand and offer customers more choice in an era of increased competition.
Line, a messaging service and competitor to WhatsApp, wants to leverage its 33 million users to move into the ride-sharing sector. The Singapore-based, Ryde and RydeX, has 55,000 drivers and wants to expand out of the country. Arcade City, an Austin-based ride-sharing firm keen to fill Uber’s gargantuan hole, launched in Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam in August, 2017. Finally, GO-JEK, backed by Tencent and Google, has plans for a $500 million USD investment into Thailand, Vietnam, Singapore, and the Philippines.
Who or What’s next? Watch this space. The Southeast Asian ride-sharing market share battle isn’t over. It’s only just begun.
— Tech Collective (@TechCollectiv3) June 27, 2018