Hong Kong - Apple invested $1 billion in Chinese ride-sharing service Didi, making one of its biggest bets on software and services and dealing a blow to Uber Technologies’ ambitions in the country.
The iPhone maker will help Uber’s largest rival build up a ride-sharing platform that handles more than 11 million rides a day and serves about 300 million users across China, Didi said in a statement on Friday. It joins other investors including Alibaba Group Holding and Tencent Holdings, the country’s two largest Internet corporations.
Apple is under pressure to find other markets to expand into as growth of its main smartphone business slows. Chief Executive Officer Tim Cook has highlighted higher-margin services as a growth area and suggested he would use some of its $200 billion-plus cash hoard for investments. Till now, it’s mostly bought or backed smaller companies developing technology that complements existing offerings. Its single largest acquisition was for headphones-maker and streaming music service Beats.
The investment in one of China’s largest online companies will allow Apple to forge alliances in its single largest market outside of the United States.
“This gives people another reason to use Apple Wallet and increases Apple’s presence in China,” said Chi Tsang, an analyst at HSBC Securities Asia. “Didi’s a good partner to have, it’s a good operator, and could provide additional collaboration with Alibaba and Tencent.”
Apple confirmed Didi’s statement. Didi, incorporated as Xiaoju Kuaizhi, is in the process of raising more than $2 billion at a valuation of about $25 billion, people familiar with the matter have said. The round could close in weeks, people said.
It operates in 400 Chinese cities and works with more than 14 million Chinese car owners. The company is Uber’s most potent rival and has formed an international coalition with Lyft in the US, India’s Ola and Southeast Asia’s Grab to fight the globally expanding San Francisco firm.
While Didi jumped out to lead in China, Uber is spending heavily to catch up and has said the country could eventually become its largest market. Both need capital to pay for recruiting drivers and subsidising customer fares. Didi will be profitable soon, Vice-President of Strategy Stephen Zhu said at a Credit Suisse Asian Investment Conference in Hong Kong last month, without giving a specific time frame.
“Didi exemplifies the innovation taking place in the iOS developer community in China,” Cook said in the Chinese company’s statement. “We are extremely impressed by the business they’ve built and their excellent leadership team, and we look forward to supporting them as they grow.”
BLOOMBERG