Grab is taking over Uber activities from April 1st. This will leave Grab being the only Asia-wide ride-hailing operator with the risk of a monopoly will lead into fare increases.
The announcement came a week ago: US-based Uber decided to sell its business to Singapore-based competitor Grab, in exchange for a 27.5 percent stake of Uber into Grab while Uber CEO Dara Khosrowshahi will join the company’s board of directors.
Grab will consequently extend its leadership as the most cost efficient Southeast Asian platform, as it takes over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
This deal is the largest-ever of its kind in Southeast Asia. Grab will integrate Uber’s ridesharing and food delivery business in the region into Grab’s existing multi-modal transportation and fintech platform. With the combined business, Grab will drive towards becoming the #1 online-to-offline (O2O) mobile platform in Southeast Asia and a major player in food delivery.
Interestingly, Grab take-over occurred just a few months after both Uber and Grab launched business in new countries such as Cambodia and Myanmar.
To minimise disruption, Grab and Uber are working together to promptly migrate Uber drivers and riders, Uber Eats customers, merchant partners and delivery partners to the Grab platform. The Uber app will continue to operate until April 8 to ensure stability for Uber drivers, who can find out how to sign-up to drive with Grab online [www.grab.com/sg/comingtogether]. Uber Eats will run until the end of May, after which Uber delivery and restaurant partners will move to the GrabFood platform.
Grab’s acquisition of Uber had been rumoured for several months, despite the US firm denied many times any merger.
How would the merger translate for consumers? Will fares increase? In an e-mail to Malaysian newspapers, Grab assured that there will not be any changes to the fares. “For services that are on dynamic fares such as GrabCar and JustGrab, fares will continue to be calculated based on a base distance, with a dynamic surcharge that will be applied based on factors including demand and supply in that particular point in time, traffic conditions and estimated time taken for the journey.
“This is a fair calculation for drivers as they navigate varying road conditions throughout the day. This means fares are lower in low demand periods – and vice versa – which helps match drivers to passengers efficiently throughout the day,” it states.
However, in the longer term, the monopoly situation could have negative effects with higher fares being required as strong competition will have disappeared in most countries.
Indonesia should however the most resilient thanks to the presence of a strong ride-hailing bike service Go-Jek. In recent months, Singapore State-company Temasek as well as Google invested into Go-Jek, as the Indonesian start-up is rapidly expanding its app-based services.
Grab is one of the most frequently used O2O mobile platforms in Southeast Asia. Over 5 million people use the combined platform daily. Today, the Grab app has been downloaded onto over 90 million mobile devices, giving passengers access to over 5 million drivers and agents, the region’s largest land transportation fleet and agent network.
Grab is in 195 cities in eight Southeast Asian countries, and offers the widest range of on-demand transport services including private cars, motorbikes, taxis, and carpooling services, in addition to food and package delivery services. Grab Financial increases access to cashless services for millions of Grab customers across Southeast Asia, and connects the underserved and unbanked population to financial services.