The headquarters of Uber in San Francisco. (Eric Risberg, AP)
Hong Kong - Just a year ago, Travis Kalanick told anyone who would listen that China was Uber Technologies’ most pivotal market. He’s now waved the white flag.
Uber is about to join a lengthening list of US companies that have stumbled in the world’s largest internet market, from Yahoo! to Ebay.
It’s capitulating via a deal that will see arch-foe Didi Chuxing buy out its local business to create a $35bn Chinese ride-share leader, according to people familiar with the matter.
Uber and its backers will be left with about a 20% economic stake in the enlarged local player, Didi said.
The deal is the culmination of more than a year of take-no-prisoners war between the world’s two largest ride-sharing companies, a series of clashes played out in the media and on the dusty streets of hundreds of cities.
That battle, waged through massive subsidies on rides, wound up costing Uber $2bn, the people said. Alarmed, its investors clamored for a ceasefire.
In the end, Didi proved too resourceful - and too well-connected - for the ride-sharing giant to dethrone.
Uber threw in the towel just days after China banned the practice of charging less than the cost of a ride, depriving the US company of a tried-and-true engagement tactic.
In a blog post obtained by Bloomberg before an official announcement, Kalanick portrayed the deal as a merger that strengthens both parties; others, including Grab CEO Anthony Tan, saw it as a humbled Uber taking its ball elsewhere.
“The road to China has been littered by corpses of foreign technology companies that have tried to operate here unsuccessfully,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia.
“This could be viewed as a setback for Uber, but it could have been much worse.”