The effects of the $35 billion deal will be felt for years
In a summer of big tech deals, this could be counted as the most unexpected. Uber is selling its China operations to its bitter – and more successful – rival, Didi Chuxing, which controls 80% of China’s ride-sharing market. The repercussions of the deal will be felt far beyond China, affecting everything from Uber’s prospects for an IPO to the fate of its competitors in other markets.
Uber waves a white flag
Uber isn’t a company accustomed to defeat, yet this deal marks a clear capitulation in one of its most important markets.
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Uber’s defeat is its investors’ gain
Uber is departing China with a dazzling door prize: a sizable stake in a de-facto monopoly of China’s ride-sharing market. Uber’s China expedition echoes Yahoo’s experience there.
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Uber could finally go public
With nearly $6 billion in capital raised in the past year alone, Uber may not need an IPO, a fate Kalanick has worked to avoid.
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Tech’s China syndrome
Uber is only the latest U.S. tech giant to either stumble while pushing into China’s market or to decide early on to forego such an effort. Yahoo’s Alibaba investment marked the end of its active presence there.
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Bad news for Lyft
Last September, Didi invested $100 million in Lyft as part of a so-called anti-Uber alliance, a move that boosted Lyft’s prospects.
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It gets (even more) complicated
With Didi investing $1 billion in Uber, Apple, which in May invested $1 billion in Didi, becomes an indirect investor in Uber.
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What next?
All of this sets the stage for some interesting potential outcomes. Will Uber’s capitulation inspire venture capitalists to take hard stands on other unicorns? Could an Uber IPO break the logjam of unicorn IPOs?
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