• by Thom Forbes , August 1, 2016

Like two bitter foes who agree to share a ride in a downpour, Didi Chuxing is buying Uber’s brand, business and data in China in a deal that will create a new company said to be worth about $35 billion.

The deal is a “stark signal of how difficult it is for American Internet companies to thrive in China,” write Paul Mozur and Mike Isaac in the New York Times. “The merger is a great détente between the two companies, which for two years have been fighting relentlessly for market share in mainland China, spending tens of millions of dollars every month to attract riders and drivers.”

“This is extraordinary because if you recall, just a month ago Didi was saying that this was not in the cards,” Haidi Lun reports in a Bloomberg TV segment accompanying an article by Eric Newcomer and Lulu Yilun Chen that broke the story. 

“The truce brings to an end a bruising battle between the two companies for leadership in China’s fast-growing ride-hailing market,” they write. “Uber has been spending at least $1 billion a year to gain ground in China, while Didi offered its own subsidies to drivers and riders to build its business.” 

Uber and investors in its Uber China unit will take a 20% stake in Didi, and it will be its largest shareholder, Rick Carew, Alyssa Abkowitz and Eva Dou report for the Wall Street Journal. Uber co-founder and CEO Travis Kalanick will join Didi’s board; Didi founder and CEO Cheng Wei will join Uber’s board. “The Chinese ride-hailing company will also invest $1 billion in Uber as part of the deal, a person familiar with the matter said,” they write.

“Three years ago I traveled to China with a small group of people to see if we might be able to launch Uber there. It was an ambitious idea, given that we were still a relatively small start-up and no one there had ever heard of the company. Most of the people we asked for advice thought we were naive, crazy — or both,” Kalanick writes in a blog post leaked to several news organizations in advance of the formal announcement.

“However, as an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart. Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there,” he continues. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”

Didi’s Cheng was a bit more detached in a statement announcing the agreement.

“Didi Chuxing and Uber have learned a great deal from each other over the past two years,” he says. “This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level.”

“Now, everyone owns everyone everywhere,” writesRecode’s Kara Swisher. “Consider: Didi has investments from China bigwigs Alibaba and Tencent and also has a partnership with Uber’s U.S. rival Lyft, as well as with Grab of Indonesia, another Uber competitor. Apple recently made an investment in Didi and General Motors made one in Lyft. Uber’s investors are everyone, including China’s third powerhouse Baidu.” 

It is also yet another object lesson in the perils of attempting to go it alone in China. 

“Yi Beichen, a technology analyst and author of The Era of Mobile Internet, noted that Uber’s tie-up with Didi marks yet another example of a big U.S. tech company trying — and failing — to make a go of it as a wholly foreign-owned enterprise in China. Online shop eBay lost out to Alibaba, while Google left amid concerns over hacking and censorship. Yahoo and MSN changed their ownership structures,” write Tracey Lien, Paresh Dave and Julie Makinen for the Los Angeles Times.

“This is the trend,” Yi said. 

In other Uber news yesterday, the Financial Times Leslie Hook reports that the San Francisco-based company will invest $500 million in developing its own maps after last year hiring Brian McClendon, who previously ran Google Maps and helped create Google Earth.

“By developing its own maps Uber could eventually reduce its reliance on Google Maps, which currently power the Uber app in most of the world,” Hook writes while also reporting that the “disruptive car-hailing company” has expanded its business to more than 60 countries and provided more than two billion rides to passengers in them.

When exactly is it, one wonders, when disruptive becomes mainstream?