Baidu makes strategic investment in Uber

Opening up a new model for Sino-US Internet cooperation

Baidu has successfully attracted the attention of Baidu by jointly launching "Baidu Private Car" with Yidao Yongche and then strategically investing in Uber, the originator of taxi-hailing software. Yesterday, Baidu officially announced a strategic partnership with Uber and invested in it. The two parties will cooperate in three aspects: technological innovation, opening up international markets, and expanding China's O2O services. This is also the first time that Internet companies from China and the United States have carried out in-depth cooperation in product operations.

The investment intention emerged half a year ago

As early as a week before the news was officially disclosed, the specific amount of Baidu's investment in Uber had become a hot topic in the industry. According to the blog of Uber founder and CEO Travis Kalanick, the company completed a financing of US$1.2 billion and reserved US$600 million for "strategic investors", so the industry generally speculated that Baidu was a strategic investor. However, at the press conference, the two parties did not disclose the transaction amount. Baidu Chairman and CEO Robin Li said: "I usually don't attend any investment press conferences, and Baidu did not hold a press conference for its US$1.9 billion acquisition of 91. But this time with Uber is not just an investment behavior, but more of a business strategy." Robin Li said that this is the first time in history that Chinese and American Internet companies have truly in-depth cooperation.

When talking about the reasons for the strategic investment in Uber, Robin Li said that Baidu's strategy in the mobile Internet era is to connect people and services. Uber represents travel, which is very compatible with Baidu. Six months ago, he visited Uber's headquarters in the United States and felt the charm of this Silicon Valley company, which led to the idea of ​​investing in Uber. "Uber is a phenomenal company with many innovations. It has indeed changed and will continue to change the way people travel. I am very much looking forward to seeing Uber bring new value to Chinese consumers."

It is reported that Uber entered the Chinese market in November 2013 and has launched services in 9 cities across the country, including Shanghai, Beijing, Tianjin, Wuhan, Chengdu, etc. After entering China, Uber faces the dual challenges of competition with local taxi software companies and policy compliance. Uber CEO Kalanick said that Uber is currently operating well in China and is not facing legal risks for the time being. In the future, Uber's local services in China will be integrated with services such as Baidu Maps to improve user experience.

Baidu + Uber, what story can it tell?

Uber is known as the originator of "taxi-hailing apps" because it advocates the sharing economy by saying "not everyone needs a car" and has become popular in the United States and Europe through "central dispatch + on-demand service provision". It is reported that Uber is currently valued at $40 billion. Last summer, Google Ventures led the $258 million Series C investment in Uber; Google Ventures also chose to follow the $1.2 billion Series D investment. Uber has always been regarded as a reference for domestic taxi-hailing apps. The high valuation and rigid demand in the Chinese travel market have also stimulated PE to excitedly invest in this emerging field.

However, in this crazy money-burning competition, the taxi-hailing software industry has not yet achieved profitability. The large number of users gained by "burning money" also have limited time problems such as low loyalty and high conversion rate. In addition, the limited transportation capacity and uneven service levels of drivers have made user experience a headache for major software companies. The entry of Baidu + Uber may promote the overall service level of taxi-hailing software to a higher level and bring better travel services to consumers.

Tian Zheng, vice president of Analysys Business Solutions, said that the fundamental reason for Baidu's investment in Uber is to develop O2O. The key to O2O is the flow of offline personnel. People, goods, money and venue are the four most important elements of O2O. Taxi-hailing apps can solve these four elements, and in the future, taxi-hailing apps will also be able to handle "incidental logistics." Therefore, Baidu must now find a partner to develop O2O, and it can only choose Uber.

In fact, as an important traffic portal and the key to the layout of O2O, Baidu Maps, which has over 100 million users, has been looking for the most suitable taxi-hailing software tool. In August this year, Baidu and Yidao Car announced their cooperation to launch "Baidu Private Car". In September, Baidu Private Car also connected with AA Car Rental to provide "airport pick-up and drop-off" services. Baidu's more ideas are to rely on Baidu Maps, a super portal for travel, to do a good job of the interface of the open platform and connect people and services. Choosing an industry-leading American company as an investment target can help Baidu's pace of globalization.

Robin Li said that any investment made by Baidu is viewed from the perspective of strategy and business cooperation. There are many misunderstandings in the outside world that Baidu will only acquire some companies in full, or at least take a controlling stake, and will not make small investments. In fact, this is wrong. "We will not make any investment for pure financial returns. This is our bottom line."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.