Ola seen gaining from Apple’s $1 billion investment in Didi

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Bengaluru: The $1 billion investment by Apple Inc in China’s largest cab hailing service Didi Chuxing will provide a shot in the arm for Indian unicorn Ola, which counts Didi as a strategic investor, in its market share battle with rival Uber.

The maker of iPhones announced on Friday it will invest as much as $1 billion in Didi in a surprise deal that will come as a blow to its fellow California-based tech giant Uber.

Didi already counts e-commerce giant Alibaba Group and Tencent Holdings, two of the three largest Internet companies in China, as its key backers apart from Japan’s SoftBank Group, some Chinese state owned firms and other marquee investors.

In December, Ola, Didi and two other international cab-hailing services, US-based Lyft and Singapore-based GrabTaxi, entered a global ride-share agreement to take on common enemy Uber, the most valuable Internet start-up that wants to dominate urban transportation across the world.

Ola had raised some $500 million from Didi, SoftBank and others in November.

While the global alliance hasn’t translated into any meaningful change in business for any of the four companies, the sheer amount of funds raised by Didi over the past 18 months (more than $4 billion) gives the company significant firepower to fund peers such as Ola, which is scrambling to keep Uber at bay in India.

For Uber’s plans of dominating urban transportation across the world to succeed, it will need to dominate at least one of India and China. Uber, led by the controversial entrepreneur Travis Kalanick, is the undisputed market leader in the US, its home country, but has faced significant regulatory and business challenges in India and China.

By all accounts Didi dominates the cab hailing and ride sharing market in China though Uber and Didi disagree on exact market share numbers.

In India, while Ola is still market leader, Uber has caught up with its local rival far more than it has with Didi, according to investors and analysts. (Even here the two companies disagree on exact market share numbers)

If Didi continues to dominate China, the stakes for Uber will increase dramatically in India.

For Ola, having access to a would-be Uber conqueror in Didi Chuxing may prove to be invaluable especially given the current investor perception that Indian unicorns are overvalued.