Uber Cedes Russia to Yandex with $3.7B Merger Agreement

https://www.bloomberg.com/news/articles/2017-07-13/uber-cedes-russia-to-yandex-with-3-7-billion-merger-agreement

by OoTheNigerian • 9 years ago

109 41 9 years ago

bloomberg.com

baybal22• 9 years ago

Uber got itself into its own 'LeEco moment'

charlesdm• 9 years ago

If you can't beat em, join em.

reactima• 9 years ago

Uber got very dominant in market share in Moscow with all its subsidized rides. I paid 200USD for 30 rides! This is not sustainable...

baybal22• 9 years ago

You haven't seen their prices in T2 cities, it is like $1 per 5 to 6 kms. And they have the problem of "Uberists" - people who drive themselves around when Uber subsidizes rides. And they also have issue of botters who do the same, but at industrial scale (without actually driving themselves or anybody else of course)

martinald• 9 years ago

So they have two phones, one for driver and one for customer, and they request rides and accept themselves? Clever.

throwaway312338• 9 years ago

Amusingly, that's comparable or slightly lower than what I'd have to pay for a Auto (tuk-tuk) ride here in India.

lukasm• 9 years ago

When I was in a small city outside Moscow I was paying $1.50 for a 1 min of a phone call and $1.40 for 10 mins cab ride. It was cheaper to take the cab and talk to someone than to make a call.

COMMENT___5• 9 years ago

Did you call Alpha Centauri? Did you use Russian service provider?

bad_user• 9 years ago

I'm from Bucharest, Romania. The average price here is something like $0.35 / Km and the price I'm paying for a ride is somewhere between $2.5 and $5.

And that's the price of Uber as well, which can go up in rush hour, but we now have Taxify as well, which I prefer because their prices are more predictable.

So when you're saying that you paid $200 for 30 rides, that seems expensive to me.

superlopuh• 9 years ago

I have a feeling that they had not anticipated the level of the competition in Russia, where the cabs were such unbelievable scams that the locals had launched mobile-first services long before Uber entered the market.

adventured• 9 years ago

It's a moot issue. There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term. Uber is fortunate if they come away from Russia with anything. In most industries Putin is reluctant to allow even his own oligarchs outright control. The notion he'd allow Uber to own their taxi / ride-hailing business is laughable (even assuming Uber could compete well enough).

bwb• 9 years ago

So true.

oscii2• 9 years ago

There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term.

I think that's not quite true. The industry (oil, car manufacturing, software, etc.) is pretty much dependent on the Western products and tech.

Besides Uber, GetTaxi is quite popular in Russia. And there are more local similar taxi services besides Yandex, but they are less known. In general, Uber and Yandex are the most popular at the moment.

konart• 9 years ago

What about Gett?

eps• 9 years ago

Uber never dominated in Russia.

I talked to Moscow taxi drivers on more than one occassion and they were dismissive of Uber as an older and inferior iteration of what Yandex.Taxi was doing. Uber was never at the top, but at a fairly distant second, so their minority-shareholder "merge" with YT is of no surprise.

calafrax3• 9 years ago

Uber is fortunate if they come away from Russia with anything

"Uber will invest $225 million and take a 36.6 percent stake ... Yandex will invest $100 million and own 59.3 percent"

If they are paying twice as much as their partner for a minority stake I am pretty sure they will not be coming away with anything.

shubhamjain• 9 years ago

I often think how better off Uber would have been had they stayed away from markets which no sane company would chose to compete in until, at least, a few years of founding, let alone an operation-heavy company like Uber. In India, autos are already way inexpensive and customers are too price-sensitive to prioritise service. Although, Uber has become the dominant one here but it'll take a while to understand how profitable the bet on India was.

Travis didn't just want to dominate the industry, he wanted to dominate the world: a megalomania to a whole new level.

gtrubetskoy• 9 years ago

There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term.

You're probably right, and I wouldn't be surprised at all if the government passed a law enforcing that some day.

But - in this particular case, I have to say that Uber had nothing on Yandex, who has been in the Russian maps and taxi business far longer and their navigation app is absolutely top notch (you should see how it lays out the route, and the funny jokes the navigation voice cracks when you're stuck in traffic), as well as their taxi app. Yandex is a very clever company and infrastructure questions aside, they are hard to compete with.

In fact, I'd argue that Yandex's technology is better in some respects than Uber or Apple's and Google's (if we're talking maps) but you will not see Yandex taxi service in the USA for the exact same reason you've stated, in the US it will be a US company.

BTW, Google is only #2 search engine in Russia as far as I know, simply because Yandex is better. I often find myself checking ya.ru when searching for Russian words when Google comes up empty.

thriftwy• 9 years ago

I think you're oversimplifying Russian Taxi market a great deal.

First of all, you're saying that mobile-first services were launched because cabs were crap. The market was good because the market was bad?

Medium-size cities had very cheap fixed-rate taxi-by-telephone services. Like, whole city flat rate for $3 in driver's own old beater.

Meanwhile Moscow had awful taxi services (very unreliable and expensive) and you had better luck just lifting your hand when near the road (yes, that's how it actually worked).

Then Yandex launched their Taxi and reliability of service rose very fast while prices fell. Then, GetTaxi and Uber also entered market, as well as some smaller players like Maxim and Saturn. Yandex is still heavily focused on Moscow with unreliable coverage everywhere.

Spooky23• 9 years ago

Seems like a smart move to me. Given the political situation, operating at scale in Russia is a liability anyway. Now they get some cash and a stake in the Russian controlled operation.

amai• 9 years ago

Maybe relevant: http://englishrussia.com/2017/05/31/russian-airport-taxi-dri...

Grue33• 9 years ago

Damn. I used both and Uber is cheaper and much better customer service. Trying to get your money back from Yandex.Taxi is a kafkaesque nightmare.

COMMENT___5• 9 years ago

I don't get it. What money back? For non satisfactory service? Or for not providing the service you paid for?

Grue33• 9 years ago

For example I had a case where a driver did not finish the ride when I got out of the car and did so 30 minutes later in some random location, and I got a huge bill. I also had a driver refuse me to drive me to the destination in the middle of a ride, I also refunded that. Not that Uber drivers don't do shit like this, but I found them more professional. Now that the two companies merged, it's gonna be the worst case scenario with monopoly-driven prices and shit drivers.

Tinyyy• 9 years ago

Can anyone tell me what would happen to Uber's stake in the joint company if Uber fails? Is it auctioned off to cover its debts?

JumpCrisscross• 9 years ago

If by "fails" you mean goes into liquidation then, essentially, yes. Uber's JV stakes, like its other assets, would be used to make creditors while (under the supervision of a bankruptcy judge).

Uber Cedes Russia to Yandex with $3.7B Merger Agreement

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