Apple invested $1 billion in Didi Chuxing in early May, an Uber-like service in China that provides 11 million rides a day in China alone. Apple's investment just got better with Didi Chuxing now buying out Uber's business in China.
According to the Financial Times, "Uber has agreed to sell its Chinese operations to rival Didi Chuxing, throwing in the towel on its costly battle for the Chinese ride-hailing market.
Under the terms of the deal, Didi will acquire all of Uber China's operations and investors in Uber China will get a 20 per cent stake in Didi.
Didi said Uber would receive a 5.89 per cent stake in the Chinese company - but would have "economic interests" equivalent to 17.7 percent with another 2.3 percent going to the Uber China shareholders. Didi, which is China's largest ride-hailing company, will also invest $1bn in an equity stake in Uber's global business, in a transaction that brokers a truce between two of the most fiercely competitive car-hailing companies in the world.
The deal comes on the heels of new regulations last week that legalised the online ride-hailing industry across China.
Both companies may have been awaiting that development to push ahead, with the new framework giving the industry a more solid legal footing in China."
Uber CEO, Travis Kalanick made it official on the company blog this morning in an entry titled "Uber China Merges with Didi Chuxing.
Bloomberg noted in their report today that "The purchase of Uber's China business may complicate Didi's alliance with other ride-hailing startups around the world. Didi had agreed to work with the U.S.'s Lyft Inc., India's Ola and Southeast Asia's Grab to create a global force to take on Uber. Grab CEO Anthony Tan said in a statement on Monday that the impending deal is a victory for Didi and underscores how the ride-hailing business favors domestic players.
While Uber will walk away from operations in China, it is taking a significant stake in the largest player there. By shedding its massive losses in China, the move could help Uber clear the path for an eventual initial public offering.
On April 20, Didi's CEO Jean Liu couldn't offer specific areas in how Apple and Didi would cooperate but said on a conference call that the companies would benefit each other "on product, technology, marketing, and many other levels."
In a Forbes report in May they quoted Chi Tsang, an HSBC analyst in Hong Kong saying that Apple Pay could be used to pay for Didi. The analyst also thought that there could be a co-branding aspect to this. For instance, an advertisement could say "We're launching Apple Wallet in Beijing and you can use it to order Didi and get a five kuai (yuan) discount." When you think of the 11 million rides a day covering 400 cities that Didi Chuxing generates, that's certainly a way to put Apple Pay on the map very quickly in China. Now with Didi taking over Uber's Chinese operation, Apple's opportunities just got better.