Since Didi was removed from app stores, other ride-hailing apps thought it was the best chance to make hay, but is it really that simple, or will Didi return?
Hundreds of ride-hailing cars parked in a vacant yard in Nanjing, Jiangsu Province. Photo from CFP
By KE Xiaobin
It has been nearly three months since Didi Chuxing, the largest ride-hailing platform in China, was removed from the app stores. In June, the company went public to widespread acclaim. Success bred success until regulators said some hitherto neglected data security rules had been violated. And two days later, Didi was removed from app stores. The company quickly became the poster child for hair-trigger regulation that sent global investors scurrying home.
But for smaller platforms, the scraps Didi left - a 20 percent market share which is widely believed to be the minimum size to attract enough drivers to compete with Didi - should be all good. Though no one has anything to back up the idea.
In two months since Didi was removed from the app stores, smalltime operators have adopted Didi’s strategy, showering users with signup bonuses, discounts, and free rides.
It’s easy to dismiss the frenzy as a waste of money. Although a user may occasionally take a ride with one of these new apps when discounts are available, she is likely to stay with Didi if the app is already installed on her phone. After all, Didi has the most drivers and the best operational support in every car-related service out there. But for these newcomers, the goals are not simply to be the second-largest ride-hailing app. Everyone wants to be a leading operator of a shiny, fully autonomous fleet. The problem is, so does Didi.
Didi has monopolized the market since it saw off Uber, but everyone – techies, carmakers, even phone guys - never stop trying to steal a piece of Didi’s action. Alibaba’s AutoNavi has its own ride-hailing service, as does delivery app Meituan. Caocao Chuxing and T3, backed by Geely and a group of state-owned carmakers are also dabbling. The conclusion is that there will be no shift away from corporate monstrosities. The Didi gulf is not being filled by benign local outfits serving local needs: it’s just a slightly different menagerie of distant monstrosities.
Since Didi’s troubles began, competitors have spoken of a “once in a lifetime opportunity.” The timing of the move was indeed fortuitous for T3 - just about to close a large funding round. CEO Cui Dayong called a late-night meeting to formulate an attack plan. Meituan noisily breathed new life into its ride-hailing service, previously consigned to the ashcan of failed e-commerce.
Meituan and AutoNavi already have huge web traffic. Caoaco and T3 are just automakers trying to keep ahead of the curve. Everyone wants a smart mobility ecosystem, but no one really knows what that means apart from “not going under.” The solution to all problems, at some levels– in part at least –consists of food deliveries mixed up with huge numbers of dumbfounded users attracted by whatever cheap stuff the company throws at them.
Drivers won’t work for an app that no one uses. Without drivers, no passengers will come. Industry folklore continually recycles the 20-percent mark in any given city as the floor of competitiveness. This also explains why some companies prioritize new gimmicks over geographic expansion.
GONG Xin, Caocao’s CEO, said it’s useless and wasteful to take a city if it can’t be defended. But of course, not everyone agrees, such as T3, which has taken itself to many new places.
Didi already has a de facto monopoly in every service, so companies are speculating on new growth areas, mainly autonomous vehicles, the latest Holy Grail of corporate PR releases.
Although fully autonomous cars are still nothing but manufacturers’ fantasies, ride-hailing companies are obsessed with the idea. Didi showed off an autonomous car in November 2020, promising to put a million on the road by 2025 and to have dispensed with human drivers entirely by 2030. T3 and Caocao are scheming to dump most of their drivers by 2025. T3 hopes to scale up quickly, Caocao is betting on affordable prices. Caocao's backer Geely is already a master of budget cars.
The tasks at hand, however, are rather less bleak than the prospects for China’s millions of drivers. For Didi, the priority is to get back to the app stores, and doubtless rejoin its campaign of ceaseless destruction of competitors as soon as possible.
Everyone else is trying to get such a large market share that when the school bully finally emerges from detention, they will have such a large share that Didi will simply be unable to beat it all out of them.