Just in time for its April IPO, Uber confirmed plans to ‘make an ally out of an enemy’ by buying Dubai-based competitor Careem for $3.1 billion.
The purchase is Uber’s largest to date and marks an evolution in the company’s approach to international growth.
In recent years, Uber’s ability as a competitive global ride-hailing player had come into question following a slew of international sales in which the company traded its local operations for stakes in regional competitors in China, Russia, and Southeast Asia.
Aside from Israel (which embodies a more mature startup ecosystem) the Middle East hasn’t historically been a major hotbed for headline-grabbing investments. Of course there have been a few; two years ago, Amazon acquired its Middle East rival Souq.com for $580 million and back in 2009, Yahoo shelled out a reported $164 million for Jordan’s Maktoob.
Founded in 2012 by two former McKinsey & Company consultants, Careem operates across 120 cities and in 15 countries. Boasting over 33 million customers and one million drivers, the app is characterised by its support for cash transactions, making the app popular in cash-heavy economies such as Pakistan and Saudi Arabia. Additionally, to emphasise respect for drivers and counter the local stigma that driving is low-skilled work, Careem refers to its drivers as ‘Captains’.
Looking at the app analytics of the major MENA markets where Uber and Careem compete head to head - Egypt, Pakistan, Saudi Arabia and the United Arab Emirates - below are the findings that define why the purchase of Careem will finally enable Uber to dominate the Middle East:
In the Middle East, Careem is bigger than Uber
It’s not often that Uber plays second fiddle but it appears the app is having a harder time getting noticed in this region. So far in 2019, Careem has ramped up a whopping 43% more downloads than its rival - outperforming Uber in all of the observed major markets.
Our 2018 end-of-year data illustrates that Careem wiped the floor with Uber throughout all of last year too, with the regional app outpacing the Silicon Valley prodigy by 22% more downloads.
Pakistan is the Middle East’s largest market
The birth of ride-hailing services has had a massive impact in Pakistan, which now makes up the largest market for both Careem and Uber.
So far this year, Careem has amassed almost 1.3 million downloads from Pakistan - 19% more than Uber. In 2018, Careem app downloads in Pakistan hit 6.7 million, trumping Uber’s total of 3.7 million.
Pakistan: Careem & Uber Downloads (iOS only)
Pakistan is a vital market for Uber and is believed to be a key reason behind this acquisition. In a recent email to staff, Uber CEO Dara Khosrowshahi underpinned the importance of Pakistan as one of Uber’s “fastest-growing markets in the world.”
Pakistan: Careem & Uber Downloads (Android only)
Whereas in other markets - China for instance - Uber decided to partner with and have a smaller stake in rival Didi Chuxing, it seems Uber has now learned that spending mountains of cash to try and muscle out the regional competitor only to potentially settle for exiting the region and ending with just a stake in the local top player is not the way to go!