Apple invested $1 billion in Chinese ride-hailing app Didi Chuxing, formerly known as Didi Kuaidi, the single largest investment the company has ever received.
Apple will join companies like Tencent and Alibaba to “help further Didi’s mission of building a data-driven rideshare platform to serve hundreds of millions of Chinese drivers and passengers,” Didi said in a statement.
According to Financial Times (FT), Didi was valued at $20 billion in recent funding rounds, up from $15 billion last July. The report added that the move by Apple is a “departure from its historic aversion” to invest in start-ups.
Apple’s CEO Tim Cook said “Didi exemplifies the innovation taking place in the iOS developer community in China”, adding that “we are extremely impressed by the business they’ve built and their excellent leadership team, and we look forward to supporting them as they grow.”
It is unclear what size Apple’s stake will be and experts believe there are several reasons Apple could be interested in Uber’s main rival in China.
The FT report quoted Phil Lisio, head of The Foote Group, as saying that “Apple’s got so much money, and no organic growth accelerators. So aggressive M&A with market leaders in China makes sense.”
The firm may also want to integrate Apple Pay, launched in China in February, with Didi’s app.
According to IHS Technology, despite Apple’s strong presence in the Chinese market, its latest investment highlights the need to work with local players to strengthen its position in the country.
It is worth noting that Cook is set to meet with high-level Chinese officials in Beijing as the company faces a number of obstacles in the mainland as well as slowing growth globally.
IHS also said taxi apps can be a way into developing a wider automotive strategy and this investment is further evidence of Apple’s interest in transportation and the automotive market, “beyond its current Apple Maps software.”
“Apple’s recent acquisition targets include companies involved in augmented reality, artificial intelligence, GPS and navigation, camera technology and education, all of which give insight into its future strategies and priorities,” IHS’ Jack Kent, mobile director, observed.
Cheng Wei, founder and CEO of Didi, said the investment from Apple is “an enormous encouragement and inspiration,” adding that the firm wants to make flexible and reliable mobility choices available to every citizen and help solve transportation, environmental and employment challenges.
Didi claims it completes over 11 million rides a day, serving close to 300 million users in more than 400 Chinese cities. It also said it controls 87 per cent market share in private car-hailing and over 99 per cent market share in taxi-hailing.
Back in December, four ride-hailing services — Didi Chuxing, US-based Lyft, India’s Ola and Southeast Asia’s GrabTaxi – agreed to partner to scale up their services to compete against rival Uber.
Not long after, a group of Chinese investors put nearly $2 billion into Uber, as it faced increased competition.