Apple Inc. is investing $1 billion in Didi, giving the Chinese ride-hailing startup a powerful ally and dealing a blow to Uber Technologies Inc. as it tries to build its business in the country.
The iPhone maker will help Didi build up a ride-sharing platform that handles more than 11 million rides a day and serves about 300 million users across China, Didi said in a statement on Friday. Didi’s funding round has now reached $3 billion and the company is valued at about $26 billion, according to people familiar with the matter, who asked not to be identified as the matter is private.
Uber is spending millions to try and catch Didi in China yet its business in the country is just a fraction of its local rival, which covers more cities with a bigger fleet of cars. Both companies are in an expensive battle for market share, raising capital needed to recruit drivers and subsidize customer fares.
“Didi’s a good partner to have, it’s a good operator, and could provide additional collaboration with Alibaba and Tencent,” said Chi Tsang, an analyst at HSBC Securities Asia.
Prior to adding Apple, Didi had been in the process of raising more than $2 billion at a valuation of about $25 billion, people familiar with the matter have said. The company already has backing from Alibaba Group Holding and Tencent Holdings, the country’s two largest Internet companies.
Didi didn’t respond to queries about its funding round and valuation.
Didi, formally known as Xiaoju Kuaizhi Inc., was created last year when separate apps backed by Tencent and Alibaba merged. It now operates in 400 Chinese cities with 14 million registered drivers, offering services from taxis and private cars to social ride sharing and test driving.
Uber, the world’s most valuable startup, has set a target of operating in 100 Chinese cities this year. The company has said its able to support its China push because its making $1 billion annual profit from its 30 largest global markets. Uber didn’t respond to e-mailed requests for comment.
Travis Kalanick, Uber’s CEO, responded to the news by noting a new personal connection to Didi.
“girlfiend owns @apple shares which makes her a didi investor,” he said in a post on his verified Twitter account.
Uber has battled regulatory and legal issues since its founding. In California it agreed to shell out as much as $100 million to drivers, services in Sweden shut down amid a battle with regulators while its often met with protests from taxi drivers when it enters a new market.
Apple’s investment comes as the iPhone maker is under pressure to find other markets to expand in as its main smartphone business slows. Apple CEO Tim Cook has highlighted higher-margin services as a growth area and suggested he would use some of its $200 billion-plus cash hoard for investments.
Apple is also working on an electric vehicle project.
“Didi exemplifies the innovation taking place in the iOS developer community in China,” Cook said in the Chinese company’s statement. “We are extremely impressed by the business they’ve built and their excellent leadership team, and we look forward to supporting them as they grow.”
The company is Uber’s most potent rival and has formed an international coalition with Lyft Inc. in the U.S., India’s Ola and Southeast Asia’s Grab to fight the globally expanding San Francisco firm.