Yandex.Taxi Merges With Uber in Russia

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Yandex.Taxi, which comes from Russia, has collaborated with Uber recently after Chinese Didi Chuxing, which is one of main competitors for Uber, bought Uber Chinese business last August. After the new collaboration is settled, the new form is valued at 3.7 billion dollars now, 59.3% by Yandex, 36.6% by Uber, and others by employees.

Why does Uber cooperate with increasing of competitors in recent years instead of doing the work independently? For Uber, in previous several years, they tried to attract customers with increasing number of discounts for cheaper rides and promising drivers with higher wages. It dramatically raised the cost of operations. In the previous quarter in 2016, Uber lost 991 million dollars. Moreover, after Uber expanded its market in other countries, the company seriously faced cultural and geographic problems. Sophisticated scammers, crippling gridlock, and a regulatory environment were all difficulties that Uber faced in China. In Europe, the service of Uber was forced to be suspended in Denmark due to the rules of taxi-friendly, and the company’s core model of hiring drivers as independent contractors was restricted by the policies of worker-friendly. In Russia, Uber was restrained by mapping technology. Thus, in order to avoid losing profits by those problems, Uber has started having collaboration with local expert taxi companies to decrease the loss and main global competitors.

For local companies like Yandex Taxi, they could decrease the cost of competing with Uber. Yandex Taxi spent a lot of money to beat Uber until 2017. In the first quarter of 2017, the company lost 1.2 billion rubles and the lose of 1.3 billion rubles before the three months of that time. In other words, the company could save almost 1 billion rubles of operating profits after cooperating with Uber. Moreover, Yandex Taxi also decrease one of main competitors for the collaboration, which is the same as Uber. Thus, the collaboration is beneficial for both parts. The combination has actually resulted in completing 35 million rides in Russia and other five countries with 130 million dollars in gross bookings. The goal of them is an annual run rate of 419 million rides and gross bookings of 1.6 billion dollars.

Nevertheless, even though the collaboration is set up, it can not change the way of operation for Uber. Therefore, it actually has raised the price of Yandex Taxi. The question is coming, how are the companies going to resolve it? Customers are expecting to see the change of the price.

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