Monday, February 12, 2018

Combining Ride Hailing, Smart Cities, and Networking – part 1

Preamble: The world’s largest ride-hailing service is integrating its “DiDi Smart Transportation Brain” with the traffic planning authority in Beijing and other major Chinese cities to optimize the routing of its vehicles and lessen urban congestion. The AI system will pull data from traffic sensors and connected vehicles in a massive network application that will require the most advanced mobile and backhaul network.

On an average day, DiDi Chuxing, the ride-hailing service that acquired Uber China in August 2016, is enabling up to 25 million rides. Its app has been downloaded more than 450 million times. By the company’s reckoning, this makes it the world’s leading mobile transportation platform. There are over 21 million drivers in China signed up for DiDi and by some estimates, 80% of taxi fares in the big cities are now booked via its app.

DiDi has moved well beyond basic car rides. Its app now lets the user pick from a range of transportation options: Taxi, Express, Premier, Luxe, Hitch, Bus, Minibus, Designated Driving, Car Rental, Enterprise Solutions and even Bike-Sharing though the ubiquitous bluegogo brand. Hiring a bike on a short-term basis no longer requires a deposit –just the DiDi app and a valid user account. DiDi is now a simple and cashless way of travelling through China’s municipalities.

Business is booming too for Uber.  However, Uber and to some extent Lyft often finds itself in contentious relationships with the communities it serves. In the UK, Uber is beset by numerous legal and social difficulties. In September, Transport for London, stripped Uber of its license, accusing the company of being “unfit to operate.”  Last week, a protest against Uber by London black cab drivers caused gridlock across the city. Other municipalities are taking action as well. The City of York is the third British municipality that has acted to strip Uber of its license. In the EU, a recent ruling from the European court of justice (ECJ) has determined that Uber is a taxi operator and not an information service, requiring it to accept stricter regulation and licensing terms.  Even in its home market, Uber faces a slew of lawsuits from investors, ex-employees, customers and cities for a list of management missteps, improprieties, questionable business practices, data breaches and possibly criminal behaviour.

In contrast, DiDi Chuxing enjoys the implied endorsement of the Chinese government and the investment of all three of China’s Internet giants – Alibaba, Baidu, and Tencent – as well as Apple and dozens of other high-profile investors. Better yet, there is a regulatory framework for the company to grow.  In July 2016, China became the first country to officially legalize ridesharing. This came about when seven of China's ministries, including the Ministry of Transport, jointly published "Preliminary Rules on the Management of Online Car-Booking".

DiDi Chuxing, which is headquartered in Beijing, was founded in 2012 by Cheng Wei, a former employee of Alibaba. The company’s inception came approximately three years after Garrett Camp and Travis Kalanick established Uber, but in many ways, its brief life as a business has been just as eventful and even more meteoric.

From the outset, there were local rivals backed by various tech giants and a series of price wars. There were also protests by established taxi companies and their drivers. To gain size and stature, a merger with the biggest rival was necessary, followed by the acquisition of Uber China in August 2016, a deal that some called a forced marriage and others a marriage of convenience. (Uber retained a 5.89% interest in DiDi Chuxing, while DiDi Chuxing also got a minority interest in Uber Global).  The deal effectively consolidated the market in China, leaving this one big player and a much simpler regulatory job for government authorities.

DiDi Chuxing recent milestones
• Completed 7.43 billion rides in 2017. Launched accessible vehicles services with UNDP for disadvantaged people.
• Established a partnership with Stanford Artificial Intelligence Laboratory.
• Started new joint venture projects to build EV charging networks.
• DiDi Labs opens new campus in Mountain View.
• Adopted Apple Pay as a new payment method
• Announced a strategic partnership with Taxify, a rideshare leader in Europe and Africa.
• Announced a strategic partnership with Careem, the leading ride-hailing and internet platform in the Middle East and North Africa.
• Released DiDi's first open source software, VirtualAPK, a flexible, lightweight and powerful plug-in framework for Android.
• Closed over USD 5.5 billion financing round to support global strategy and technology investments.
• Signed new Smart Transportation partnership with Shenzhen, after Tianjin, Nanjing and Shenyang.
• Launched an overseas car rental service


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