When Goliath stands to lose every time

First China, then Russia, now South East Asia.

It is starting to sound like a familiar story.

Global taxi-hailing giant Uber enters a new market, with all the brashness and bravado of a bigger, more powerful invader, only to find itself waging a fierce battle on the streets with a home-grown rival, and then ultimately – losing the war.

We had the first inkling that Uber’s global strategy of “barging in” was going awry when it lost the Chinese market to Didi Chuxing back in 2016.

At the time, as I wrote the explanation Uber gave for the China retreat was that it made sense for it to pull out of a market that was obviously so well served by Didi, and that it wasn’t defeat when you end up with a stake in the company.

But remember, the then boss of Uber Travis Kalanick once famously said success in China meant being number one there.

Words he had to swallow evidently, especially as Uber was reportedly losing something like a billion dollars a year in China.

Bad news

Here, in South East Asia, emerges a similar tale.

Grab and Uber have been fighting to the death for market share on the mean streets of the region. It’s not just the ride hailing business for cars that they’re competing in – in countries like Indonesia, motorcycle taxi rides are big business too.

By some estimates, Uber has been losing hundreds of millions of dollars every year in South East Asia – along with its rivals.

All bad news for a company looking to go public in 2019.

“Uber is now under pressure to move towards making money for a 2019 IPO, which has been promised to shareholders,” writes John Colley, of Warwick Business School. “In China, Russia and now South East Asia it has been out-flanked by local competition with better local knowledge and connections.”

That local competition in South East Asia has come in the form of Malaysian business tycoon Anthony Tan. He’s not your usual startup kind of guy, hailing from a family business with a well established network to tap into.

Having grown up in the region he understands the different and diverse nature of South East Asian markets.

Motorbike passengers – or Ojek passengers – in Jakarta for instance, are quite different from taxi-hailing Singaporeans. Customers in Bangkok have starkly differing travelling needs to commuters in Kuala Lumpur. Mr Tan says being based in South East Asia gives him the advantage in solving regional problems.

Mr Tan has also got bigger plans for the young startup, a company that has also managed to attract investment from the likes of Japan’s Softbank, which also owns 15% of Uber.

In Singapore last month, the young and ambitious boss of what has now effectively become South East Asia’s most powerful ride hailing app, told me how he wants Grab to be everything to everyone – across this market of 600 million people.

“We want to be that app that allows you to buy your coffee, earn rewards, then after that you want to buy your lunch and… have your food delivered so you don’t have to go through the traffic jam,” he said.

“When you’re that relevant, that real to every customer across the 600 million base, then you create huge value.”

Soul searching

But Mr Tan can’t afford to be complacent. Even though he’s managed to push Uber out of this market, he’s got a hungrier, leaner upstart to face in the form Go-Jek, Indonesia’s Google and Temasek-backed ride hailing app.

Right now, it’s stuck to home ground, but there are rumours that it might head to the Philippines shortly.

For Uber though, there’s sure to be some soul searching ahead.

This is the third market it’s pulled out of in the last couple of years. The company has been keen to stress that this deal with Grab is a merger of equals – a partnership of sorts.

But the internal email from Uber’s boss Dara Khosrowshahi reveals just how much of a detour the firm may have made in its global strategy.

“One of the potential dangers, of our global strategy,” he writes, “is that we take on too many battles across too many fronts with too many competitors.”

Uber has been quick to stress that there is no more consolidation on the cards – in fact, Uber’s chief says that’s out of the question.

But in the Asian markets Uber is still operating in – Japan, South Korea, and India – it is facing local competition.

And if the experience it’s had out on these streets with homegrown competitors is anything to go by, Uber may be in for a bumpy ride ahead.

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Uber sells South East Asia operations to rival Grab

Uber is selling its South East Asia ride-share and food delivery businesses to regional rival Grab.

The move marks a further retreat from international operations for Uber, after it sold its China business to local rival Didi Chuxing.

Both firms describe the deal as a win for their passengers, but analysts warn it could mean higher prices.

Grab is South East Asia’s most popular ride-sharing firm with millions of users across eight countries.

Under the terms of the deal, Uber will take a 27.5% stake in Singapore-based Grab. Uber’s chief executive, Dara Khosrowshahi, will also join Grab’s board.

The value of the deal has not been made public.

Grab’s chief executive Anthony Tan said the deal “marks the beginning of a new era” in which the merged business would be better placed to serve customers.

Uber’s Mr Khosrowshahi said the deal would “help us double down on our plans for growth as we invest heavily in our products and technology”.

The deal marks Uber’s third retreat after it withdrew from China in 2016 and sold its Russia business to local firm Yandex last year.

Mr Khosrowshahi has been preparing the firm for an initial public offering in 2019.

Uber invested $700m in its Southeast Asia business and another $2bn in China before it sold its operations there.

In November, Mr Khosrowshahi, said the company’s Asian operations were not going to be “profitable any time soon”.

Analysis: Karishma Vaswani, Asia business correspondent

Uber is keen to push the message that this isn’t a retreat from South East Asia – that instead, this is a merger of equals – a partnership of sorts.

But while it’s true that Uber does get a sizeable stake in Grab, it is hard to ignore that this is the third market it is pulling out of. First China, then Russia – now South East Asia.

Look closely at the internal email that Uber chief executive Dara Khosrowshahi sent his staff announcing the deal, and you can see a hint of an acknowledgement that perhaps their global strategy of barging into overseas markets isn’t going as well as Uber had planned.

“One of the potential dangers of our global strategy,” he writes, “Is that we take on too many battles across too many fronts with too many competitors.”

This deal does beg the question what does Uber do next in Asia – because it is only really Japan, South Korea and India that it now operates in – and in all of those markets, it is facing competition of some sort, home grown or otherwise.

If this defeat at Grab’s hands is anything to go by – Uber best be prepared for a tough battle ahead.

Read more from Karishma, here:

Less choice?

Last year, Uber lost $4.5bn (£3.2bn) – and its chief executive – as it underwent a fundamental shake-up following a harassment scandal.

But some fear that its withdrawal from South East Asia could result in higher prices for users there.

“Industry consolidation will mean fewer choices for commuters and fares are likely to trend higher over time,” said Corrine Png, a transport analyst from Singapore-based research firm Crucial Perspective.

Competition in the ride-hailing sector has been fierce, resulting in discounts and promotions offered to riders and drivers reducing profit margins.

But consolidation in the industry was widely expected after Japan’s Softbank Group made a large investment in Uber last year.

SoftBank is a major investor in several of Uber’s rivals including Grab, China’s Didi Chuxing and India’s Ola.

It is believed to have pushed for consolidation in order to improve revenues.

Grab currently operates in eight countries including Singapore, Malaysia, Indonesia and Vietnam.

The deal – which is yet to be approved by local regulators – includes the sale of all of Uber’s operations in the region, including its key food delivery service Uber Eats.

As a result of the merger, the GrabFood service will expand from two to four South East Asian countries by next quarter, Grab said.

The company said the deal would help it move towards profitability, and would also help to increase “adoption of the GrabPay mobile wallet and support Grab’s growing Financial Services platform”.

Sensor firm Velodyne ‘baffled’ by Uber self-driving death

The firm that designed the sensors on the Uber self-driving car that killed a woman this week has said its technology was not to blame.

San Jose-based Velodyne told the BBC it was “baffled” by the incident, adding its equipment was capable of seeing in the dark.

Elaine Herzberg, 49, was struck by the car late on Sunday night in Tempe, Arizona. She died in hospital.

The investigation into what caused her death is ongoing.

Video of the incident was published by investigators earlier on Wednesday. It showed Ms Herzberg walking with her bicycle, away from a pedestrian crossing. Neither the car – nor its human driver – reacted.

A spokeswoman for Uber told the BBC it would not comment on Velodyne’s view while the inquiry took place.

‘Can see perfectly well’

Velodyne’s Lidar sensors are used by a number of companies testing self-driving cars on public roads today.

Lidar is a type of radar that essentially gives the car the ability to “see” what is around it.

Velodyne Lidar president Marta Hall told the BBC it would not be advising its customers to halt tests in the wake of the Arizona death because “we do not believe the accident was due to Lidar”.

Instead, the company is pointing to Uber’s on-board computer as potentially being to blame, Ms Hall said.

“Our Lidar can see perfectly well in the dark, as well as it sees in daylight, producing millions of points of information.

“However, it is up to the rest of the system to interpret and use the data to make decisions. We do not know how the Uber system of decision-making works.”

Software accusation

While it makes use of third-party hardware, Uber’s self-driving cars use software developed in house.

Uber has suspended its self-driving programme – which was taking place in four US cities – until it knows more about what happened.

The firm’s chief executive Dara Khosrowshahi said of the incident: “We’re thinking of the victim’s family as we work with local law enforcement to understand what happened.”

Velodyne said it had not been in contact with Uber about the incident, but was in the process of preparing to speak to investigators.

The National Traffic Safety Board said it was working on a preliminary report to be published within the next few weeks – a fuller conclusion will not be made for several months.

Ms Hall added: “We are very sad, sorry, and worried for the future of a project which is intended to save lives.”


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Uber self-driving crash: Footage shows moment before impact

Police have released two videos showing the moments leading up to a fatal crash involving a self-driving Uber car in Tempe, Arizona, on Sunday.

In the 14-second video, the autonomous vehicle is seen failing to slow down before hitting Elaine Herzberg, 49, who is walking her bike across the road.

One video shows dashcam footage of the impact. The other, an Uber operator monitoring the car’s controls.

Uber has suspended self-driving tests in North America following the crash.

In footage released on Wednesday by the Tempe police department, the human Uber operator sitting inside the Volvo appears to be looking down at something while the vehicle is travelling in autonomous mode.

Moments later, the woman appears visibly shocked as she looks up to see Ms Herzberg crossing the highway in their path seconds before impact.

“The video is disturbing and heartbreaking to watch, and our thoughts continue to be with Elaine’s loved ones,” Uber said in a statement.

“Our cars remain grounded, and we’re assisting local, state and federal authorities in any way we can,” the statement added.

Police said the accident happened on Sunday night, adding that Ms Herzberg had not been using a pedestrian crossing.

Ms Herzberg was taken to a local hospital following the collision but died of her injuries.

The US National Highway Traffic Safety Administration and the National Transportation Safety Board earlier said they would be investigating the incident in Tempe.

While self-driving cars have been involved in multiple accidents, it is thought to be the first time an autonomous car has been involved in a fatal collision with a pedestrian.

Uber halts self-driving car tests after death

Uber said it is suspending self-driving car tests in all North American cities after a fatal accident.

A 49-year-old woman was hit by a car and killed as she crossed the street in Tempe, Arizona.

While self-driving cars have been involved in multiple accidents, it is thought to be the first time an autonomous car has been involved in a fatal collision.

Uber said that its “hearts go out to the victim’s family”.

“We’re fully cooperating with @TempePolice and local authorities as they investigate this incident”, the company said in a statement on Twitter.

Police said the accident happened Sunday night while the car was in autonomous mode. A human monitor was also behind the wheel.

Police said the woman, Elaine Herzberg, had not been using a pedestrian crossing. Herzberg was taken to a local hospital where she died.

The US National Highway Traffic Safety Administration and the National Transportation Safety Board said they were sending teams to Tempe.

‘Wake up call’

Companies including Ford, General Motors, Tesla and Waymo are investing heavily in research to develop self-driving cars, which are often characterised as the future of the industry and hailed as a way to reduce traffic accidents.

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    Many states across America have welcomed the tests in the hope of keeping themselves at the forefront of new technology.

    However, there have been warnings that the technology is being deployed before it is ready.

    Anthony Foxx, who served as US Secretary of Transportation under former President Barack Obama, called the accident a “wake up call to the entire [autonomous vehicle] industry and government to put a high priority on safety.”

    More than a dozen states in the US allow autonomous vehicles on the roads to some degree. Officials typically require a person to be on hand either in the car or remotely in case something goes wrong, according to the Center for Automotive Research.

    The US is working on national safety guidelines for such vehicles.

    Consumer Watchdog, a lobby group that has warned of the risks of autonomous cars, on Monday called for a moratorium of such vehicles on public roads, describing the accident as a “tragedy we have been fighting years to prevent”.

    “We hope our calls for real regulation of driverless cars will be taken seriously going forward by Silicon Valley and the Trump Administration,” the group wrote on Twitter.

    Uber started testing driverless cars in Pittsburgh in 2016. The ride-hailing firm has also been testing driverless cars in San Francisco, Pittsburgh, Toronto and the Phoenix area, which includes Tempe.

    The death comes a year after Uber took its self-driving cars off the road following an accident that left a Volvo SUV on its side in Arizona. The programme was later reinstated.

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      Carla Bailo, president and chief executive of the Center for Automotive Research, said more information about how the crash occurred is necessary before officials can say what went wrong and how the self-driving system should be improved.

      She also said the fatality should be considered in the context of all accidents.

      More than 37,000 people, including almost 6,000 pedestrians, died in traffic accidents in the US in 2016, according to the US Department of Transportation.

      “We need to be fair and look at all the data,” she said. “But I don’t think anybody is taking this lightly. By far safety is the first concern.

      Tempe Mayor Mark Mitchell said he supports autonomous car tests because of the technology’s potential. He also praised Uber’s decision to suspend the programme as “responsible”.

      “Our city leadership and Tempe Police will pursue any and all answers to what happened in order to ensure safety moving forward,” he said.