Uber Forms Partnership with Russian Rival Yandex
The most recent example of this is that on Thursday Uber announced that it formed a partnership with Russian Internet Yandex operator of a search giant and Yandex the ride-hailing service known as Yandex-Taxi.
Both companies will combine their businesses of ride-hailing in Russia and a number of other countries in Eastern Europe under a new but not yet named company.
This deal, which will need regulatory approvals, will value the combined entity at over $3.4 billion. It will operate jointly by Uber and Yandex, with its CEO being Tigran Khudaverdyan who is CEO at Yandex.Taxi.
Uber is to invest $225 million, while $100 million will be invested by Yandex and it will retain the majority stake in the new entity.
This move is rare for Uber. The San Francisco based company is known for being aggressive in its approach to entering new global markets and will end the costly battle that the two firms have seen drag on for more than three years since the arrival of Uber in Russia.
It comes as well during a difficult time for Uber, only weeks after its co-founder and CEO stepped down.
However, the deal is a reflection of the intense competition that Uber has at times faced in its overseas expansion that can only be described as aggressive.
In 2016, Uber realized that it was outmatched by its rival in China, where it spent billions in rider subsidies trying to gain its foothold against rival Didi Chuxing.
After a long battle, Uber sold its subsidiary to the China-based Didi Chuxing and formed another new entity that operates in that region. Uber retained just 17.5% of that new business.
In Russia, the ride-hailing apps establishment has transformed its taxi market, which previously was dominated by unlicensed and irregular services. Individuals would offer services as taxis and customers would stop them for rides negotiating prices in cash.
Now the taxi sector has become formalized, though not quite as regulated as countries in Western Europe. Those using services such as Yandex.Taxi and Uber as well as one other rival Gett know who their drivers are and what cars they will arrive in.
They can now pay using credit cards and will be given receipts.