Ever since SoftBank invested in Uber, Uber’s presence in Asia has been diminished and is continuing to shrink. The latest development is Ola’s expansion into Australia. Uber and Ola both fight for the Indian market, now Ola, the Indian company has taken the fight into one of Uber’s main markets, Australia.
Ola’s co-founder and CEO Bhavish Aggarwal told the media in Australia that “We are very excited about launching Ola in Australia and see immense potential for the ride-sharing ecosystem which embraces new technology and innovation.” This, of course, comes to no surprise to most of the rideshare drivers in Australia, since they are mainly Indian.
Ola intends to bolster their presence by “stealing” Indian drivers from Uber as well as helping more Indian’s seeking employment in Australia with preferential employment treatment. This will speed up Ola’s expansion as well as preserve their Indian based corporate culture.
It does not come to us as a surprise, this new venture into Australia by Ola is part of SoftBank’s global vision where they are compartmentalizing rideshare companies to specific areas, capitalizing in local expansion and saturation to cut out non-SoftBank companies and making Uber, Ola, Didi and Grab the global giants, dividing the world into four segments.
Ola claims to make a billion rides annually in India, with over 125 million users in over 100 cities. Their main issue with their home market is revenue. The average taxi fare is low, making income from Ola cars extremely low when compared to other markets. This is why Ola has to strengthen its income through foreign markets with stronger currencies. Australia is a classic market for Ola to compete and gives it another large presence in Asia.
Even though SoftBank is a partner in both companies, it does not make both companies partners to each other. Uber has to continue increasing its sources of revenue to build up a strong profile before their IPO next year. However, Uber’s presence in Australia was hit by its actions in London, where Uber was ordered to remove its operations from the UK capital. Australia Northern Territory has also demanded that Uber removed their presence and banned them from operating. In another instance in Australia, Uber lost in court over the goods and services tax (GST) tax that their drivers must pay.
Nigam stated that with all of Uber’s problems and loss of their Chinese and Russian markets, what they have done is set the tone for the new ridesharing ecosystem. Allowing local competitors to enter when a vacuum is set. In both cases, Uber did not leave empty handed and retained a percentage of the market through their holdings in Russia (Yandex) and China (Didi).
The advantage Ola has over a local rideshare company is their cultural link with the majority of the rideshare and taxi drivers in Australia. This will be used to leverage a market takeover by Ola over Uber.