Apple-Backed Didi Chuxing to Purchase Uber's Ride-Hailing Operations in China

Why is Uber despicable? I don't know anything about them other than you can hire a ride through the app. An old friend of mine mentioned he drives for them but he's never said much about it. He got sick for a month and I had to give him some money so his utilities wouldn't be cut off. So I am guessing their drivers don't get much in the way of benefits and I've been a little worried about that for his sake. But again, we didn't discuss it because he's been through a lot and so we stick to other topics.

We'll have to be careful or this will end up in PRSI (which I guess is true for a lot of threads these days, probably says something about us). Uber is a political lightning rod for those who have strong opinions about unions and for those concerned about the changing nature of our economy via the use of technology. Those who strongly favor the protection of unions view Uber as a threat as they are making a very large and rapid dent in traditional taxi service (which in many areas is heavily union). Uber drivers are not "employees" but rather independent contractors using Uber's service as a sort of lead generation tool, connecting their "business" with potential customers via the app. Since in this framework they operate as a small business Uber doesn't have to provide things like health insurance or sick days, aspects of employment that these workers would have if they were employed directly by a transportation company (e.g. taxi company). If you look at Uber's history this all makes sense, they started by trying to pitch themselves as a lead service to the traditional taxi companies providing them with current technology in exchange for a cut (finder's fee) but the taxi companies passed. They then decided the model could go direct and anyone could become a member of Uber receiving these requests and driving independently. The flip side to this is that depending upon how much control you attempt to exercise over the workforce, employment law can classify you as an employer even if you work strictly with contractors (there are ongoing lawsuits with franchise models as well as Uber and others about this topic). If a business were to require employees to be present every day 9-5 and wear their uniform and provide specific policies and procedures for them to adhere to etc... eventually the law just says "you are employing that person so all employment law applies to you." As opposed to the traditional contractor approach of, "here's an objective and my requirements for the goal now you'll get there for X compensation." It can be a very fuzzy and broad line between the two but those with an emotional investment either way feel that Uber is most definitely in one camp or the other.

What I've just described, along with Uber's huge success, has made them the poster child for what's been dubbed the "gig economy." The way in which some people work (and many of those may prefer to work) is on a gig basis, much like the traditional form of contracting. To proponents this is like a buffet, they can pick and choose a combination of tasks (sometimes very small like an Uber ride or sometimes much larger like a months or years long project) and have flexibility in both the type of work they do and schedule. This *can* involve higher payment than 9-5 "w2" work but also generally comes with expenses (freelancers need to provide their equipment for the job in many cases) and could be lower net after tax implications (1099 workers are responsible for the full set of taxes [payroll tax] w2 workers typically aren't aware of because their employer pays them on their behalf) etc... The other side of this arrangement is that a "gig" worker isn't going to have the traditional set of benefits (health insurance, paid time off for vacation or sick, retirement plan, etc...) that traditional employment has provided. The latter has many people concerned.

Finally, Uber has a history of viewing existing laws on taxi services as protectionist or back door revenue generators for the local governments that enacted them and as a result has taken a strategy of just disregarding those laws in the hopes of becoming popular enough to force change. In some cases they've just openly paid fines for their drivers if they were caught and continued right on until specific action was taken in cities (or countries) to outright ban them. In any case, explicitly violating laws (although not criminal, typically ordinances) is shady but again there are two very different perspectives in place here. To the Silicon Valley technolibertarian those laws are protectionist for an entrenched oligopoly and the only way to get a foot in the door is to violate them until the masses support you and demand change (Uber becomes incredibly popular with customers almost every it goes and has a long history of achieving that change if it operates long enough). To the labor/union supporter they are an evil group bringing in low cost scabs and pushing out traditional jobs and their strategy of ignoring ordinances is another arrow in Uber's opposition's quiver.

There's no black and white in any of this. Some of the anti-Uber claims are just laughable (early on the big push was that taxis are regulated and thus safe but Uber's unregulated vehicles would be death traps, I use Uber on a regular basis and every vehicle I've been in has been clean and sound unlike the many taxis I used prior that rattled and shook with every acceleration or brake, many of those were down right scary). Some of their claims have merit (they've now shifted to more focus on the status of the workers and broader implications of a widening gig economy, whether or not that frightens you becomes more of a philosophical debate).

Full disclosure, I am a regular Uber customer and very much enjoy the service. As someone who travels frequently and dealt with the horrible state of traditional taxies prior to Uber's existence I'm very happy they have come to be and now would rather walk than take a traditional taxi. Hopefully I've stated everything here from a neutral perspective though.

I'm confused. $35BB sounds like Didi was producing $35BB in cash and equity stake but then it states $35BB combined value with $1BB against a $68BB valuation. So did they purchase Uber China for $1BB and then revise Didi's cap up to $35BB based upon the acquisition? That's not a $35BB deal.

edit: or are there two deals going on here, Uber China receiving 20% stake in Didi per the headline deal and Didi making a separate $1BB infusion to Uber (as in the US parent) against a $68BB valuation (of the parent)?

edit 2: read the non-paywall article, the first edit is correct. This is 1) a merger of Didi with Uber China to continue operating under Didi brand and management; for this merger Uber China stakeholders will receive a 20% share of the merged entity. 2) Separately but possibly (likely?) related, Didi making a $1BB investment in Uber USA at a $68BB valuation (about a 1.5% stake of Uber USA). I'm not in M&A but I'd call that an $8BB deal (or $7BB and $1BB deals).

Why is Uber despicable?...

It is because Uber "uses" its drivers. Uber doesn't pay for the drivers car maintenance, medical issues, insurance problems.

Great.

Uber is a despicable company with the ethics of Google, and Apple is now a part of that.

I'm trying to remember when Apple last did something that surprised and delighted me; perhaps it was the Cookie Monster ad.

Thank goodness for small mercies.

Apple: skating where the puck will be.

See also: https://www.macrumors.com/2016/07/28/bluetooth-headphone-revenue-up-iphone-7-launch/

Two points -
2. I still do not see american companies succeeding in China. The rules are different and seem to change to the advantage of the Chinese companies. I think this is the best for Uber in that they can get something back for their investment. Apple continually loses court cases (most which seem very one sided) and is constantly at risk in China, even though that is where most of their manufacturing lives. American companies, IMHO, have yet to figure out how to maneuver in this strange system and few succeed. This may be an unfortunate but case study on how to succeed -- start a company, wait for the chinese to copy, and then sell to them for a profit and move on.

So, there are quite a few successful American companies in China. A lot of them are in the service and manufacturing industry, even the entertainment industry is relatively successful as long as artists don't wade into political issues.

The issue is technology companies, and really its a tit-for-tat battle. America refuses to let Huawei robust access to the American market on 'national security concerns' so China does the same to U.S technology companies. Part of it is letting domestic technology companies lead the way (i.e. infant industry argument) another is national security reasons. Apple is an interesting case. Apple's hardware business isn't at risk in China (China isn't going to ban Apple products). But, it's services (iCloud, iTunes, ext.) all must comply with Chinese laws. The court cases its losing are more a show of force than anything long lasting and basically a warning shot to Apple rather than anything more. Apple is actually a really successful company in China, despite what click-bait articles might suggest, any Anti-Apple protests are short-lived and have zero support from the vast majority. It's a way to show patriotism more than anti-americanism or anti-american company.

Uber was pretty successful in China and rivaled Didi pretty well. The trouble is that both companies aren't earning much money so consolidation is a step towards profitability. Even before this, Uber and Didi were technically illegal, but the CCP turned a blind eye for the most part. So, this isn't so much about Uber not being successful in China because it's an American company, more about consolidating and monopolizing the market rather than competition.

And, honestly, it wouldn't surprise me Apple were involved in these talks somehow. This could be a huge round-about way to get access to mapping data and self-driving car technology. It's not secret Uber and Didi are investing in self-driving cars, along with Baidu and other Chinese companies. Plus, remember that time Apple invested $1 Billion in Didi and then Didi invested $1 Billion Uber... That's just a coincidence, right?... It couldn't be Apple playing a long-con...could it? No... Never! Companies are honest, and straightforward and trustworthy!