Uber plans to buy Dubai-based rival Careem for $3.1 billion, the largest acquisition for the ride-hailing company. The acquisition ends Uber’s costly rivalry with Careem over market share in the Middle East. In the past, Uber has taken similar action with rivals, most notably forming a joint venture with local rival Yandex in Russia in 2017 and selling its operations to China’s dominant ride hailing app, Didi Chuxing in 2016.
With Careem, Uber gains access 400 million users across 84 cities in 15 countries, bolstering the US-company’s position against rivals like Lyft ahead of an IPO, which it filed for just five days ago. The deal will help Uber achieve its goal of reaching one billion users.
Acquiring to Go Global
The acquisition is reminiscent of Amazon’s acquisition of Dubai-based ecommerce platform Souq in 2017. In both cases, US-based companies found acquiring a local company the best way to expand in a growing region. The Middle East is desirable for tech companies because of its young, tech-savvy population that is increasingly doing everything from hailing rides to buying groceries and clothes online.
As the US tech market becomes increasingly crowded, companies like Uber and Amazon look international for the next high-growth market. Especially with global expansion, due to cultural and regulatory issues, acquisition can be the best path forward for rapidly and successfully achieving growth. Like Amazon, initially Uber plans to keep the local platform operating, at least at first. Amazon, has since decided to open its own Middle East marketplace, undoubtedly leveraging lessons from its time spent running Souq. Perhaps Uber will take a similar path.
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Date: Wednesday, May 15
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