2017 has not been a kind year for Uber and yesterday the company had yet another setback when it announced that it was going to wind up its operations in Russia. Russia is a key market and the company had poured in a lot of money in order to capture it but yesterday Uber announced that it was going to merge its operations with those of its competitor Yandex. Last year, Uber exited china after failing to make a dent in the market and this development comes as a blow to the company's global aspirations.
Another setback for Uber
Uber's troubles over the course of the past year or so is quite well documented and the ouster of charismatic founder and CEO Travis Kalanick has also come as a body blow for the company.
Russia had been a key market for Uber due to their goal to become a global taxi hailing giant and following Uber's exit from China last year, they could not afford to lose out to Yandex in Russia. Yesterday Uber announced that it was exiting Russia and merging their existing business in the country with Yandex.
The fresh venture will see Uber investing $225 million in collaboration with Yandex and give the American company a 36.6% share in the business. It is valued at $3.73 billion, according to a report by Bloomberg. The deal is expected to be completed by the end of the year but it marks an end of an era for the company, as it were.
Global plans in disarray
Over the past few years, Uber has sought to make the taxi hailing app a global leader and while it has conquered certain markets, its record in some of the biggest markets remains patchy.
Uber's plans of global domination now lie in disarray. The company is still the leading taxi hailing app in the United States but following the setback in China and continued losses in India, the withdrawal from Russia looks like a body blow. However, it is also important to point out that it will also help the company in minimizing its losses and boost revenues as it tries to reinvent its business.
Uber's head of operations in Africa, Middle East, and Europe Pierre-Dimitri Gore-Coty put up a brave front in his statement. He said, “This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business.” Uber's investors have been alarmed at the magnitude of losses in emerging markets like India and the exit from Russia could be the start of a restructuring process that could see the company complete similar deals in the near future.
