Apples Oranges and Big Data

Apple Inc made news recently by investing $ 1Billion in Chines ride-hailing service Didi Chuxing. This move is also interpreted in the market circles of Apple trying to make peace with Chinese government after it shutdown iTunes in the country. Apple was forced to view the impositions seriously after China pulled down iTunes and iBooks. In the wake of such developments, its significant to note that Billionaire investor Carl Icahn, who is Apple’s largest outside shareholder sold his apple shares stating Beijing could “come in and make it very difficult for Apple to sell there”. The crackdown by China forcing Apple to bring down the curtains on Apple’s s iTunes Movies and iBook services pushed Carl to pull the trigger to sell his shares. Ironically, Apple’s manufacturing plants are located in China, and despite the investments pumped, didn’t prove a deterrent for China to shut down iTunes, which did sour the ties shared. So investing in Didi, instead of Uber, Apple is trying the smoothen the rough edges and improve relationship with China. Apple’s investment is the biggest so far, alongside with other investors like the Chinese technical heavyweights Tencent and Alibaba . 

One theory that was floated was Didi shares a good equation with the Chinese government. Didi’ initial strategy was e-hailing taxis. When the Chinese government clamped e-hailing as illegal, Didi collaborated with the taxi companies by providing Didi’s mapping and routing systems. Didi’s partnership with Haibo, a Shanghai taxi company is telling about its willingness to offer space and not crush competition. Didi, is putting up a stiff competition to its American rival Uber through its strategic partnership and expansion with the US based Lyft and Grab in Southeast Asia and also investments with Olacabs in India. It’s also widely speculated that Apple is pressing on the pedals to speed up its own electric cars that’s been in the pipeline. Apple, in this context, faced with foreign policy pressure of China for ‘foreign online services’ that disallows competing directly with local companies, investment with Didi is strategic given that Apple Pay is supported in Didi's cab-hailing app. Besides, the investment hopefully should become a beachhead for further developments in the automotive segment. The advantage with Didi is its peer-to-peer service is legal in China as it works together with ‘labor companies endorsed by government and leasing companies to confirm conformance of automotive regulations by its drivers. 

Didi says “it’s doing 3 million rides per day compared to Uber’s 1 million”. Didi Chuxing referred to as “China’s Uber” completes more than 11 million rides a day with 87% of the private ride-hailing market in China. Today, Didi is profitable in 200 out of 400 cities in which it operates and holds 99 percent of the taxi-hailing market, according to company vice president Stephen Zhu. Didi provides Apple with a rich data source for its self-driving vehicle push. It also could provide benefits to Apple’s mobile ecosystem. Ride-sharing apps are closely linked to payment services, such as Apple Pay. They also can be the foundation for other mobile commerce transactions such as deliveries “We understand the Chinese market,” Tony Qiu, director of Didi’s strategy group, commented “We know every day where people are traveling from or to, so we try to aggregate those demands.” Tim Coulling, of Canaly - an analysis firm opined that Apple has good reason to want to link up with a company that boasts 300 million users in 400 Chinese cities. “What this gives Apple is access to a large user base of people within China from which they can harvest data,” he said. Apple may be able to make use of data about driving habits and China’s complicated road system for its mapping functions as well as development of a car. · Derrick Cogburn, an associate professor at the School of International Service at American University, said almost every tech company is in the race for big data that informs product development and marketing. They are “all collecting lots and lots of aggregate data about our patterns and our habits,” he said.