On February 16, the news leaked that Uber is reportedly preparing to sell its Southeast Asian business to Grab, in exchange for the stake in the company. This is the third time that Uber decided to abandon the efforts to establish itself as a leader in the region, choosing to join forces with the strongest regional players instead: in 2016, Uber China was acquired by Didi Chuxing, and then in 2017, Uber merged its Russian assets with Yandex.Taxi.
In both cases, Uber hasn't actually fully exited the markets, but received significant minority equity stakes in the newly formed entities. This allows it to benefit from future growth in those regions, while also freeing the resources to be invested elsewhere. Still, the fact that Uber is now about to abandon another market that was long considered to be one of the most promising in terms of its long-term potential, is telling: the war of attrition can become too costly even for the most well-funded companies, especially if they have to compete against the strongest regional players in multiple geographies simultaneously. And the fact that those players are often very well funded themselves, have a significant head start and a much better understanding of the local specifics, doesn't help.
To be fair, I don't think that it's all doom and gloom for Uber: merging with the leading regional players, instead of continuing to wage the often doomed war actually makes total sense. However, it also raises a couple interesting questions. First, Uber might find itself effectively locked in some of those entities, unless those companies become large enough on its own to make public offerings an attractive option to achieve liquidity. If, for some reason, an IPO isn't an option, the only viable buyer for those companies will most likely be Uber itself. Second, there is a very real possibility that Didi would soon emerge as a truly global player, with its latest acquisition of 99 in Brazil only strengthening the case for it. If, or rather when, that happens, Uber will face a significant conflict of interest, being at the same time a major shareholder and a key competitor to Didi. This is, of course, not the first time in history such a conflict would emerge, but still, it would be curious to see how Uber would choose to deal with it.