Uber surrenders in Russian Federation and merges with Yandex

Uber surrenders in Russian Federation and merges with Yandex

Founder and CEO of Gett, Dave Weiser, believes that merger of Yandex.Taxi and Uber businesses might lead to higher prices for online taxi services, he said on his Facebook page.

Uber is ceding control of the Russian market by agreeing to merge its ridesharing business in the country and five other ex-Soviet republics with Yandex, the Russian search-engine leader that also runs a popular taxi-booking app. Uber does not now operate in Armenia and Georgia.

That marks a sizeable gain on the $170 million Uber invested since entering the region three-and-a-half years ago, even with the new $225 million investment. The newly formed venture is valued at $3.7 billion and is owned 59.3% by Yandex and 36.6% by Uber, with the remaining 4.1% held by employees.

"This combination greatly enhances Yandex's ability to offer better-quality service to our riders and drivers, to quickly expand our services to new regions, and to build a sustainable business", Yandex.Taxi CEO Tigran Khudaverdyan said in a statement.

"Combining our business with Yandex will give us a very significant stake in a new company which will initially serve more than 35 million trips each month and operate in an incredible 127 cities in six countries across the region". While Uber remains the dominant ride-hailing operator in the United States, it has been on the defensive, beset by scandals that led to Travis Kalanick's ouster as chief executive officer.

Uber's entry in markets worldwide often faces backlash from local taxi companies and legal restrictions.

Kalanick and his longtime deputy Emil Michael both helped negotiate the deal in Russian Federation before they were pushed out of Uber last month, people familiar with the matter said.

"Many of us who work inside Yandex feel that everyone has already switched to ride-sharing, but in reality, we are just at the beginning of this journey", Khudaverdyan wrote in a blog post.

Uber's loss before interest, taxes and stock-based compensation totalled US$708mil (RM3.03bil) in the first three months of the year, an improvement from the US$991mil (RM4.25bil) loss in the prior quarter.

A Yandex taxi is seen in central Kiev, Ukraine.

"The effective elimination of Yandex's most unsafe competitor represents the key upside surprise, while it should also point to an easier and shorter path to profitability", BCS said. This week, it told investors that losses continued to decline in the second quarter, a source familiar with the report said. Based on data provided by Yandex, Uber did less than 12 million rides in June 2017, while Yandex.Taxi did close to 24 million.

Uber's plans of global domination now lie in disarray.