What SoftBank's $10b investment in Uber means for its battle with Ola

SoftBank boss Masayoshi Son sees a big opportunity in ride-hailing as a whole, reports Tech In Asia

Scandal-ridden Uber has confirmed a deal to sell a chunk of its stakes to SoftBank. The Japanese giant could invest US$10 billion over the next month to acquire 14 percent or more of Uber’s shares, both in fresh and existing stock.

The investment in Uber comes on top of the billions SoftBank has poured into other ride-hailing companies: Didi in China, Grab in Southeast Asia, and Ola in India. Just a month ago, it led a US$2 billion investment in Ola.

SoftBank boss Masayoshi Son sees a big opportunity in ride-hailing as a whole. So his strategy is to get substantial stakes in all the major players. If one or more of them emerge as winners in the long run – that is, regardless of which company wins these ride-hailing battles – SoftBank will be sitting on top of a huge global business.

This is similar in strategy to SoftBank’s investments in India’s ecommerce market. Initially, it hedged its bets by investing in both Snapdeal and Paytm. This year it upped the stakes by investing US$2.5 billion in Amazon’s biggest rival in India – Flipkart. At the same time, it made a solo investment of US$1.4 billion in Paytm.

As for the weakest player among the trio – Snapdeal – SoftBank tried hard to merge it with Flipkart but the deal fell through when the Snapdeal founders decided to hold out for more.

The inference one can draw from that is Ola and Grab will get backing as long as they remain in contention as market leaders. But if either of them loses market share rapidly like Snapdeal did in 2016, then it could be curtains or at best a distress sale.

Also, it potentially shuts out niche players with the leaders widening their offerings, as Ola has been doing with auto-rickshaws (three-wheelers).

Auto-rickshaws are a popular means of transport on congested Indian roads, clocking nearly 230 million passenger rides a day. Ola says it has onboarded 120,000 auto-rickshaws, and recently equipped them with free wifi. Uber, on the other hand, has struggled to get its auto act going, shutting down services in a few second-tier cities after running pilots. This is an excerpt of the article published on Tech in Asia. You can read the full article here.