Bengaluru: After the merger of Uber’s China unit with Didi Chuxing, the largest ride-hailing service in China, India may become for Uber what it is for another American tech giant, Amazon: a market it cannot afford to lose.

After the merger of Uber’s China unit with Didi Chuxing, the largest ride-hailing service in China, India may become for Uber what it is for another American tech giant, Amazon: a market it cannot afford to lose.

Uber, the world’s most valuable start-up, said it will merge its China unit with Didi Chuxing in a deal that values the merged entity at $35 billion, according to reports in Bloomberg and other publications. Uber will become the largest shareholder in Didi, which will in turn invest $1 billion in Uber’s global entity, according to the reports.

The merger of Uber China and Didi will present an awkward scenario for Ola, India’s largest cab-hailing service. Didi is already a strategic investor in Ola (promoted by ANI Technologies Pvt. Ltd); the Chinese company participated in a $500 million funding round in Ola late last year.

Not just that, Ola, Didi and two other international cab-hailing services, US-based Lyft and Singapore-based GrabTaxi, entered a global ride-sharing agreement last December to take on common enemy Uber, which wants to dominate urban transportation across the world.

But Uber China’s deal with Didi changes everything.

The blockbuster tie-up is likely to become a lot more important to Didi than its relationship with Ola. Didi has pumped in less than $100 million into Ola, compared with the massive $1 billion it is said to have invested in Uber.

That has ramifications for Ola’s marketshare battle with Uber, its fundraising efforts and its future.

There are two scenarios: either Uber will throw its might behind its India business to fight Ola or it may seek a merger with the Indian company, like it has with Didi.

History and market dynamics suggest the first possibility is much more likely.

American tech giants such as Google and Facebook that aren’t even allowed to operate in China are two of the most dominant online companies in India.

Another tech giant, Amazon, the world’s largest online retailer, is irrelevant in China despite pouring in billions of dollars.

Though it didn’t end up selling its China business like Uber, Amazon was forced to choose a path just slightly less humiliating: it started selling on Alibaba last year after giving up any hopes of catching up with the online marketplace.

In India, , Amazon has had much more success and it is now running neck and neck with Flipkart, India’s largest e-commerce firm, in the race for market leadership.

“India will evolve differently (than China)," said Kashyap Deorah, serial entrepreneur, Mint columnist, and author of The Golden Tap, a book on start-ups.

Didi’s relationships with Ola and Lyft, he added, had served their purpose. “Didi has achieved the purpose of winning the monopoly in China. In India, Uber will win because of free/open market dynamics, though overall urban transport market will remain fragmented."

India’s competition regulator, Competition Commission of India, is also seen to be much more active and stricter than its Chinese counterpart, meaning that a merger between Uber India and Ola would be much tougher to push through.

“From Uber’s perspective, they have prioritized their markets—while China is no longer their priority, they will push the India business a lot more aggressively," said Anil Kumar, founder at market research and advisory firm Redseer Management Consulting Pvt. Ltd. “Going will be tougher for Ola, not because Didi has acquired Uber’s China business but because Uber will be way more aggressive in India. Uber has a bigger appetite and ability to burn cash and that will hit Ola."

While the prevailing view is that the Ola-Uber war will now escalate, some industry executives believe a merger between the two companies is inevitable because of flaws in their business model and the difficulties in building a self-sustaining business.

“In India, both consumers and drivers are fooled into believing that aggregators have something special on offer, but it is a capital game that they are playing," said Siddhartha Pahwa, chief executive at Meru Cab Company Pvt. Ltd, India’s third largest cab hailing service. “We believe there is a high probability of a similar arrangement happening in India between the top two aggregators that will clearly lead to a monopoly. Once a monopoly is established, the fare will significantly increase and passengers will have no option but to pay. Drivers will be left high and dry if incentives are withdrawn from the system."

Ola didn’t respond to an email seeking comment. Uber declined to comment beyond what its chief executive said in a blog post, confirming the deal with Didi.

To be sure, Ola is in a dominant position currently. After Uber’s rapid expansion last year, Ola has again pulled away from its rival after launching Micro, a low-cost offering, in March. However, the success of Micro also proves how fungible the market is: a change in prices dramatically affects business.

And, if Uber does make India its top priority, it is likely to pour hundreds of millions of dollars into discounts and incentives for drivers.

A change in Uber’s strategy in India or perceived change could also affect Ola’s ongoing fundraising efforts.

Mint reported on 15 June that Ola has initiated talks to raise a new, large round of funds.

Will new investors continue backing Ola against a global tech giant that has a war chest of more than $5 billion? Or will existing investors such as SoftBank Group Corp., DST Global and Tiger Global Management, which has also invested a large amount in Uber, and others step up to the plate? Whose side will Didi take in India? SoftBank Group, Ola’s largest investor, as well as DST Global will now own stakes in Uber through Didi apart from counting the American company as a fellow shareholder.

India’s taxi apps war has just got a lot more interesting.

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