Ola Under Threat: Uber Attacks Its $12 Billion Home Market

If Didi invests in Ola, it is effectively betting against Uber, it’s new partner in China.

Change in Asia’s Ride-Hailing Landscape

Didi Chuxing’s acquisition of Uber‘s China business last week reshapes Asia’s growing ride-hailing sector, and leaves India‘s Ola more vulnerable to attack by Uber in its $12 billion home market.

Four months ago, Ola executives met with Didi hoping the Chinese firm would invest fresh capital to help it fight Uber Technologies Inc, which, with its deeper pockets, has made rapid inroads into India.

They were told Didi wanted first to sort out its own challenges in China. Didi and Uber have raised and spent billions of dollars in a discount slugfest to win drivers, passengers and market share in China.

Didi, now worth around $35 billion, last year invested about $30 million in Ola, which is also backed by Japan’s SoftBank Group,and the two are allies in an anti-Uber group that also includes US-based Lyft and Southeast Asia-focused Grab.

If Didi invests more in Ola, it’s effectively betting against Uber, its new partner in China, the person said.

Ola Or Uber– Which One’s In Trouble?

Ola, founded by two graduates from a premier technology institute, commands half of the country’s taxi market as of end-June in terms of the number of cars registered on its platform, according to Counterpoint Research, with Uber on around 30 percent market share, and catching fast.

Uber has previously launched a bike taxi and auto service - a sign that it wants to localize transport options and a lesson from China where it focused on privately-owned cars in big cities, where car ownership has historically been low.

In February, Uber opened an engineering centre in Bengaluru and has, according to LinkedIn, brought in ex-Google executive Apurva Dalal to lead its India product build

Ola is in 102 cities versus Uber’s 27, according to Counterpoint, and offers a wider range of products – from auto rickshaws to shuttle buses, as well as taxi rides.

The Didi/Uber deal “will put Ola in a corner, and the pressure will rise,” said Neil Shah, research director at Counterpoint. “The money Ola has will not last forever and it will require a lot of funding with Uber gaining financial strength.”