What happens after Uber was Grab’d

Less than two months ago, I posed the question “May forever ba for Uber”?  It seemed like Uber was poised to stay long in the Philippines, as it announced several initiatives on the occasion of its fourth anniversary in the country.  It turns out, walang forever for Uber.  At least not in the Philippines or in Southeast Asia.

It was announced in March 26 last week that Grab acquired Uber’s Southeast Asian operations. Grab’s acquisition covers Uber’s existing operations in Philippines, Singapore, Cambodia, Malaysia, Indonesia, Thailand, Vietnam and Myanmar. Uber will have a mere 27.5 percent stake in the consolidated business over Southeast Asia. This is the third merger and acquisition deal of Uber’s business for the third straight year. In 2016, Chinese ride-hailing service Didi Chuxing acquired Uber’s China business (with Uber taking 20 percent in the combined business). In 2017, Russian taxi business Yandex also merged with Uber to service Russia, Armenia, Azerbaijan, Belarus, Georgia and Kazakhstan (with Uber receiving a minority 36.6 percent in the merged company).

An email sent by Uber CEO Dara Khosrowshahi to Uber staff on March 26 stated that “about 500 Uber staffers will transition to Grab over the coming weeks, while customers will have to shift to Grab from Uber apps.”

The questions I often hear are: How does this impact current Uber users?  Can I still use Uber in the Philippines?  Do I have to switch to Grab now?

I sought answers from Yves Gonzalez, Uber Philippines Head of Public Policy.  Instead of answering my questions, Gonzalez directed me to Grab’s website which provides FAQs for Passengers and Driver Partners.

Based on information provided in Grab’s FAQs and other sources, here are some significant matters to consider:

1.  Uber passengers and drivers must switch to Grab before April 8.

For now, everything is status quo.  Uber services will continue to be available in the Philippines and other parts of Southeast Asia but until April 8, 2018 only. After such date, Uber services will stop in the Philippines and Southeast Asia. 

Prior to the Grab acquisition, there were only two ‘Transportation Network Vehicle Service’ (TNVS) providers in the Philippines (i.e., Uber and Grab). Now that Grab has acquired Uber, the only TNVS provider in the Philippines is Grab.  Thus, Uber passengers who want to continue using TNVS must switch to Grab by downloading/using the Grab app to book rides. In contrast to Uber, the Grab App allows passengers to choose between a car or taxi.

Uber drivers may opt to join Grab by signing up as a Grab driver. Uber drivers or aspiring TNVS drivers can sign-up by following the instructions at grab.com’s “Ready to sign-up?” section.  Uber drivers who want to continue their services must register with Grab before April 8.

Uber drivers who also have existing Grab accounts can continue to drive using the Grab Driver app as long as: they still have a valid driver account with Grab, and the vehicle they are driving is part of the Land Transportation Franchising and Regulatory Board (LTFRB) audited masterlist of TNVS vehicles. Drivers who have been suspended or removed from the Grab platform for previous violations of the Grab code of conduct may not re-register as Grab drivers. 

2. Uber Accounts will not be automatically transferred to Grab.

Uber passengers’ account information will not be shared with or transferred to Grab.  Uber users who want to use Grab will have to create a new account with Grab to start using its services. 

Uber drivers may opt to transfer their account information to Grab by giving consent to such transfer. Uber drivers who transfer to Grab may still be able to log into their Uber driver app or go to uber.com to view their full transaction history at any time.

3.  Uber drivers can claim based on existing transactions.

Uber drivers will be paid by Uber for fares and corresponding incentives from rides picked-up using the Uber Partner app until April 8.  Uber will also continue to serve and resolve all existing requests during the transition period leading up to April 8. Uber support may be contacted through the ‘Help’ section of the Uber app or on help.uber.com.

4. Fares may be different from Uber.

In response to the question “Will fares change?”, Grab’s FAQs says “No.” However, that answer appears to address only the question of pricing methodology.  The FAQ states that services based on dynamic fares (like GrabCar or GrabShare) will continue to be calculated using base distance with a dynamic surcharge (based on factors such as demand and supply in that particular point in time, traffic conditions and estimated time for the journey).  Grab’s taxi options will be based on metered fares set by taxi companies.

From a practical and business standpoint, it is likely that Grab fares may be different from those formerly available in Uber. There is no guarantee that Grab fares (post April 8) will be the same as that provided by Uber.  Furthermore, Grab (and its new combined business in Southeast Asia) is a different business entity from Uber.  Therefore, independent of Uber’s prior prices, Grab would have discretion in determining the rates to be used on base distance and dynamic surcharge.

Prior to Grab’s acquisition of Uber in Southeast Asia, prices between Uber and Grab varied per country and location. A 2016 study conducted by IPrice found that, for the Philippines, Grab was cheaper than Uber. Notably however, that study was conducted during non-peak hours without taking into account surge pricing, discounts and other promos. 

5. There is no guarantee on volume of drivers or against service disruptions during the transition period.

While the FAQs do not provide an express advisory on glitches or disruptions, Grab and Uber seek for the public’s “patience during this transition timeframe if there may be any service disruptions.”

There is currently no data on the number of new/additional drivers under Grab’s onboarding process.  Grab expects to get 20,000 to 24,000 partner drivers from Uber, according to Grab Philippines country head Brian Cu. However, Grab’s FAQ states that it usually takes two working days to process new Grab driver registrations.  It may take a longer time to process drivers’ registrations as they expect a large number of new drivers registering with Grab. Grab will need to validate all applications with the LTFRB audited masterlist of Uber drivers. Newly registered Grab drivers will be given training on how to use the Grab Driver app as part of the onboarding process. 

On this note, Grab’s FAQ also calls for understanding: “We have Grab folks working overtime to onboard all new drivers, and humbly ask for your patience during this transition timeframe.”

While Grab and Uber have set an operation deadline of April 8, this may not be the final development in this transaction.

A few days after the acquisition was announced, the Competition Commission of Singapore (CCS) declared on March 30 that Grab and Uber may have violated Singapore’s Competition Act.  While investigation is ongoing, CCS proposed interim measures which may include requiring Grab and Uber to maintain their independent pricing and product options prior to the sale. 

Grab Philippines is also set to meet this April with the Philippine Competition Commission (PCC). The agency may prevent the Grab-Uber deal from pushing through pending a review of the transaction (assuming the deal meets the amounts set for mandatory notification), or if the deal is anti-competitive, said PCC Chairman Arsenio Balisacan.

Against the backdrop of these major developments, the reality in the Philippines remains. The rise in popularity of Uber and Grab is largely due to the lack of mass transport systems in the Philippines and the reliability of TNVS drivers as an alternative to taxi services. The demand for reliable transportation remains, and uncertainty is detrimental for the riding public. It would be crucial for Grab and Uber to fulfill their promise as stated in Grab’s FAQs—that, as they work together to combine their platforms, the public can “expect better service with more drivers and transport options available on one app.”