The Chinese search engine company Baidu confirmed on Wednesday that it would be investing in Uber, the U.S. ride-sharing car service startup.
Baidu’s investment could be as much as $600 million according to China National Radio reports. That figure was not confirmed by Baidu’s billionaire founder Robin Li, but represents a minority stake in Uber and entree to expand in the country and challenge competitor Alibaba.
In a press conference to announce the news, Uber founder and CEO Travis Kalanick asserted that the country isn’t posing any regulatory issues. This is a boon for the company that’s been met by opposition in its home state of California (which it overcame) all the way to outright bans in Seoul, South Korea; New Delhi, India; and Spain, among others.
The expansion should also be smoothed by the fact that Uber can now be integrated with Baidu’s Map, which is the Chinese search giant’s answer to Google Maps. In a similar investment, Uber’s app was integrated with Google Maps after Google Ventures purchased a stake in the startup. To further assist Uber to stand up to the competition, Baidu’s mobile search app will feature the car calling service prominently when users begin looking for travel-related information, according to a report in TechCrunch. Bloomberg reported that Baidu claimed its mobile search has in excess of 500 million active users per month, while its map has 240 million.
This also marks an important investment for Baidu, as the company attempts to make an even bigger grab at diverse channels of market share in the world’s largest economy. Baidu has followed Google closely to develop innovations such as a self-driving car (on the heels of its pronouncement that it would create self-riding bicycles) and showed off a slick prototype of its Baidu Eye to rival Google Glass with a headpiece that doesn’t actually have a screen and has a much longer battery life. Now this.
At the press conference to announce the investment, Baidu’s Li asserted that the car service industry is an emerging market that 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,” Li said.
How much is it worth? According to a report earlier this year in the International Business Times, 90 percent of China’s taxi market is currently held by Tencent with its Didi Taxi app and Alibaba’s Kuaidi Taxi. But it’s a consumer’s market. The competing companies use rebates and incentives that push the price of rides down to as little as 2 yuan or about 33 cents. Li is betting that Uber’s current advantage in cities such as Shanghai (safe, reliable, enjoyable) is pushing prices up to over 30 yuan. He’s probably unaware of the irony of that statement as reports of rape, murder and unsavory practices continue to dog Uber.