Apple is taking a $1 billion bet against Uber

APPLE HAS TAKEN a $1 billion stake in Uber’s largest rival in China as the tech giant shows signs of trying to diversify out of its flatlining smartphone business.

The Californian company placed the single-largest investment to date in Didi Chuxing, formerly known as Didi Kuaidi, which dominates the ride-hailing market in the world’s most populous country.

Apple CEO Tim Cook told Chinese state news agency Xinhua that he saw “lots of opportunities for closer cooperation between the two companies” following the announcement.

“We decided to make the investment for a number of strategic reasons, including the chance to learn more about certain segments of the China market,” he said.

In a statement, Didi described the US company as a “strategic investor” and the backing as an “endorsement” of the four-year-old company. It claims over 11 million rides are booked per day on its platform, accounting for 99% of the taxi-hailing market in China and 87% of the private car-hailing industry.

A car player

Apple’s backing is seen as shoring up two aspects of its own existing and developing business: revenues from the huge Asian economy and a potential move into the car industry.

The company reported its first-ever drop in iPhone sales last month as its business struggled in China, its second-biggest market after the US. That was enough to send the firm’s ever-buoyant share price down more than 10%, handing the crown of the world’s most-valuable listed company back to Google.

Meanwhile, strong indicators have been emerging since early last year that Apple has been sizing up a move into the auto sector, recruiting staff from rivals to apparently start work on the project.

Uber has, for its part, been extremely bullish on the potential of self-driving cars, which is understandable given the technology would eliminate its core expense and key source of headaches - drivers.

It was reported in February that the ridesharing company had been sounding out major auto companies about putting in a ‘large order’ for self-driving cars, despite the vehicles being only at the prototype stages.

Pay deal

The Apple investment could also open the way to a partnership between it and Didi for mobile payments, offering the US company a way to tap into the Chinese firm’s purported 300 million registered users with its Apple Pay service.

Didi has been raising funds at a reported valuation of $25 billion, which pales in comparison to rival Uber’s $62.5 billion pricetag. It has previously taken on investment from Alibaba, China’s largest e-commerce company and the beneficiary of the biggest IPO in stock market history.

Uber CEO Travis Kalanick has declared China his company’s number-one priority, despite ridesharing being technically illegal in the country – although regulations have been rarely enforced to date.

Uber CEO Travis Kalanick

In a separate Uber-related tidbit, tech news site Recode reported that media mogul Rupert Murdoch had taken a small stake in the ridesharing giant.

Murdoch’s News Corp owns the Washington Post, alongside a string of other news outlets including the UK’s The Times. It’s not the only connection Uber has cultivated with the media, with Huffington Post founder Arianna Huffington joining the company’s board last month.

- With AFP