Week in Review: Grab-Uber merger throws down gauntlet to Go-Jek

  • Go-Jek to likely use acquisition path to get to market outside of Indonesia
  • Heat turned up in battle for SEA digital ecosystem, who's going to leave the kitchen?

 

A NEW future for Uber and Grab in Southeast Asia is how Uber Technologies Inc CEO Dara Khosrowshahi positions the decision to merge its Southeast Asian operations with its ersthwhile fierce competitor, Grab.

Indeed, from bleeding money in the region over the past five years, Uber, after having invested around US$700 million in that period, according to Khosrowshahi, now has a healthy 27.5% stake in Grab that is “worth several billions” he says, adding that Uber believes Grab will be the winner in the region.

While there is much being made about reduced competition in ridesharing in the region, the impact on consumers, drivers and cab companies, Uber and Grab have their eyes on a common adversary.

In orchestrating the merger, Khosrowshahi and Grab CEO Anthony Tan have thrown down the gauntlet to Indonesia’s Go-Jek and its CEO, Nadiem Makarim, in the face of the Indonesian company’s impending expansion into SEA this year.

Nadiem is eager to go on the offensive and in media interviews has said it was time to go on the offensive and take the fight to his rivals beyond Indonesia. But huge challenges will await the company that from its 2010 beginnings as a website that lets users order a motorbike taxi by phone, has evolved to its present state as an on-demand empire in Indonesia having raised over US$2 billion in funding.

I am sure it will be using some of that funding to jump start its regional ambitions. As a regional VC tells me, given the operational complexities of each country in SEA and the challenge of finding high quality talent, he expects Go-Jek’s regional expansion to be powered by acquisitions and not via organic market entry. 

But make no mistake it’s going to be a battle beyond ridesharing. It’s going to be a battle of ecosystems, says Frost & Sullivan’s Asia Pacific managing director, Manoj Menon, looking at the big picture. And there are more players coming to the party he says with Alibaba Group Inc and SEA Group Inc also working to build dominant ecosystems (some prefer to say, platform) in SEA.

And while Go-Jek has built a commanding ecosystem in Indonesia, the regional VC tells me that will be hard for it to replicate their Indonesian ecosystem on a regional scale, since they lack the first mover advantage in the new markets.

It will also be missing the nationalistic pride that has helped it in Indonesia.

But with consumers showing no preference for any brand, rather choosing a service(s) that offer them the most convenience and value, I think there is still everything to play for in the ecosystem game. Indeed we are also going to see JD.com come into most countries in SEA this year as well. They are going to start with e-commerce, but will they stop there? Can they afford to stop there in view of the opportunities in SEA’s digital economy?

This space just got more interesting with the heat turned up and I haven’t even mentioned Amazon. Who among the existing players will leave the kitchen as well? There’s all to play for. Watch this space!

With that, I hope you are enjoying your Sunday, Happy Easter! And, here’s wishing you a productive week ahead.

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