Baidu investing in Uber, entering car-booking market
Baidu Inc. is going to invest in Uber Technologies Inc., a move that will give the Chinese web services company a larger presence in China’s car-booking market.
Baidu will be connecting its map and search features with Uber’s service, according to a statement released by the two companies.
They did not say the size of the stake that Baidu will have in California-based Uber.
The current Chinese market for car-booking services is dominated by startup companies backed by Alibaba and Tencent Holdings Ltd.
Baidu’s billionaire founder Robin Li said at a press conference today:
“The car hailing industry is still in the early stage of development. It’s a huge market and has a lot of potential. A lot of startups, and big companies like Baidu, Alibaba and Tencent all want to achieve something in this industry.”
The partnership could help Uber avoid regulatory hurdles
This partnership between Baidu and Uber could help the app-based transportation network and taxi company avoid legal and regulatory hurdles in China.
Uber has had a lot trouble in other parts of the world. Recently New Delhi banned Uber’s service after one of its drivers was accused of raping a passenger. In addition, there is a ban in Spain and Rio de Janeiro has outright made the service illegal.
Travis Kalanick, Uber’s CEO and co-founder, said at the conference with Li that Uber is currently working “pretty well” in China and hasn’t faced any pressure from regulatory agencies in the country.
According to China National Radio, Baidu’s investment in Uber could be worth up to $600 million. However, Li did not comment on the value of the stake.
After its most recent round of funding Uber has been valued at $40 billion. Since its formation in 2009 the company has raised over $2.5 billion.
“The goal of this agreement is not for the sake of investment alone, it is more for strategic cooperation and commercial cooperation. Some people think that for investments, Baidu only goes for the full acquisition or taking a controlling share and that Baidu would not take a minority investment. This is a misunderstanding.”
Travis Kalanick said:
“Today we are taking our commitment to the Chinese transportation market to a whole new level and this strategic partnership is a big part of that. Each new city that we are launching is growing faster than the one before it and far faster than the cities we are in globally.”