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When multinational business Apple made a highly unusual one billion dollar investment in China’s ride-sharing service—Didi Chuxing—the world was left wondering why the tech-giant didn’t invest in home-based companies like Uber or LYFT.
The reason behind this move was a bit more strategic than Apple wanting to hop on the ride-sharing bandwagon.
It’s no secret that Apple’s history with China has been rocky. With recent iPhone sales plummeting and the government shutting down entertainment apps like iBook and iTunes movies, the company is forced to make more tactical moves.
According to Fast Company, the Didi Chuxing deal with Apple was done for several reasons: to learn more about the Chinese market, to make up for the drop of iPhone sales and to appease the Chinese government. Because Apple’s iBooks and iTunes have been blocked by China, “Apple’s CarPlay system links to cars’ built-in display, and Didi gives Apple, which is also reportedly working on a car, another position from which to engage in the world’s largest auto market.”
Nicole Peng, research director for APAC at Canalys in Shanghai, tells Fortune, “Apple right now in China is still being seen as a smartphone provider. Less people know Apple as a service provider.” With Apple and Didi working together, this could potentially increase consumer awareness that Apple can be used for other services.
And although Apple hasn’t directly invested in other ride-hailing services like LYFT and Uber, they are inadvertently taking a cut from them. As Yahoo Finance mentions, because Didi has invested in San Francisco’s LYFT and Malaysia’s Grab taxi app, the tech titan now has a stake in these ride-sharing companies.
As for Uber, well, the company just announced that they are surrendering and selling their China division to opponent Didi Chuxing. In fact, Fortune reported in August that Apple’s $1 billion investment in Didi “helped accelerate Uber’s decision to agree a halt to a costly two-year battle with its rival in China.”
Because Did was backed by three of the world’s largest technology giants – two of which include the two largest Chinese Internet companies, Tencent and Alibaba – Uber ceded last month and “agreed to give up its independence in return for a nearly one-fifth stake in a bigger Didi.”
With the help of Apple, Didi was able to raise more money than Uber China, thus making China the first market in which, according to Fortune, “Uber’s strategy of outspending its chief competitor faltered.”
Jan Dawson, an Uber analyst at Jackdaw Research tells Fortune, “Apple’s investment in Didi likely spurred Uber to think harder about doing some kind of deal here. Uber and Apple have been partners in other markets, so for Apple to side with Didi must have been something of a red flag that things weren’t going to go Uber’s way.”
It looks like Apple’s strategy is paying off.
