Many were shocked and dumbfounded by the sale of Uber’s Southeast Asia operations to its biggest competitor, Grab. This was after Uber and Grab announced over the weekend that they have agreed to a merger in Southeast Asia, including the Philippines.
Under the agreement, Uber will sell its ridehailing and food delivery businesses in Southeast Asia to Grab in exchange for a 27.5% stake in the company. Uber CEO Dara Khosrowshahi will then join the Grab board, and around 500 Uber employees across the region will move to Grab.
Uber Philippines sent an email to its customers today:
We want to share some news with you – Uber will be combining our operations with Grab to lead you in the next chapter of ridesharing in the Philippines and across Southeast Asia.
What this means for you: we will be transitioning our services over to the Grab platform by April 8, 2018, so all requests after that date should be made from the Grab app. However, you can still use the Uber app in more than 80 countries around the world.
Grab Philippines also issued a similar statement:
We’re in the midst of combining our operations and will transition all Uber services over to the Grab app by 8 April 2018. So you’ll be able to continue using the Grab app as you normally do.
In the Grab Philippines website, the company reiterated that “in the immediate term, nothing will change and operations will continue as normal.” Grab promised to offer better services with more drivers and transportation options available in one app.
Senator Grace Poe said that ride-hailing companies should ensure their services would not be disrupted by the merger and transition.
“Although this is a business decision which should ultimately be settled between Grab and Uber, it is still imbued with public interest. We all know that thousands of commuters rely on TNVS (transport network vehicle services) to ferry them to work and other places of destination,” Senator Poe said.
Monopoly Fears
Many Uber Philippines customers expressed their fears that the Uber-Grab merger would give rise to a monopoly that might be detrimental to the commuting public.
“I really think Grab will take advantage of this opportunity; fares will probably rise to the roof,” a Tech Pilipinas reader, RJ Rancho, commented.
The Philippines’ anti-trust agency, the Philippine Competition Commission (PCC), said on Monday that they have yet to be notified of the deal by Uber and Grab. PCC Chairman Arsenio Balisacan issued the following statement:
No notification has been filed at the PCC by Grab or Uber to date. If the parties meet the new threshold, now set at P2B for Size of Transaction (SOT) and P5B for Size of Party (SOP), they should notify at the PCC within 30 days after signing of their definitive agreement.
Under the Philippine Competition Act of 2015, the Uber-Grab deal may require clearance from the PCC to ensure that the merger will not result in monopoly, price fixing and other unfair trade practices.
Grab Philippines country head Brian Cu said that the company will adhere to regulatory guidelines on activations and pricing. He assured the riding public and the government that Grab is committed towards quality of service.
“Grab is committed to cooperating with local regulators in relation to the acquisition. Grab believes the acquisition will add to, among others, vibrant and competitive ride-hailing, delivery and transportation spaces, and it will make a merger notification to the Competition Commission of Singapore,” the company said in an official statement.
What’s Next for the Philippines’ Ridesharing Economy?
With Uber’s impending withdrawal from the Philippines, many commuters are worried that Grab will take advantage of its dominant status to raise prices and provide a lower level of service.
A loyal Uber customer named Mikey Mercado stated some reasons why he prefers to book Uber over Grab:
- Drivers don’t fuss over the drop-off point. I had experiences that I waited too long because no one will get my booking because I live further down south.
- Base rates and surge charges are lower (usually 100 pesos cheaper to get an Uber).
- Cars are cleaner, drivers are more polite, and overall service is better.
Customer have long complained about the Grab app’s feature that allows drivers to see the passenger’s destination prior to pickup. This feature makes it prone to abuse by choosy drivers who will decline a booking because the destination is too remote or far away. Uber drivers, on the other hand, cannot determine in advance where a passenger will drop off.
Hopefully, Grab Philippines will address these issues on choosy drivers, pricier rates, and overall level of service as Uber customers transition to Grab. For now, Uber customers will have no choice but to transfer to Grab with no worthy competitor looming in the horizon.
A new ride-hailing app, however, is operating in Davao City. The aptly named service, HirNa, is a project of the Metro Davao Taxi Operators Association. At the moment, the service is only available for taxis in Davao City. Will HirNa grow to replace Uber as Grab’s main competitor? Or will other new ridesharing startups rise up to challenge Grab’s dominance?
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