China's Didi Takes on Rival Uber in Europe; First Stop Estonia

(Bloomberg) -- Uber Technologies Inc. and Didi Chuxing are once again going head-to-head, this time in Estonia.

The Chinese giant with a multi billion-dollar war chest is backing Estonia's Taxify OU with a financial investment and support on technology developments, the companies said Tuesday. The partnership --Didi's first major move into Europe-- will give Taxify a boost to grow in cities from Prague to London and launch in cities including Paris in the coming months, founder Markus Villig said.

“It will be hard for Uber to be number one everywhere -- we see each region will be dominated by a local champion,” Villig, who is also Taxify's chief executive officer, said in an interview. “We're focused to be No. 1 in Europe and Africa.”

Last year Didi bought Uber's brand, business and data in China, drawing a truce to a bruising battle between the two companies for leadership in the country. Didi has since expanded globally by sponsoring local players, and is already an investor in Grab, Uber's biggest competitor in Southeast Asia; Ola, the largest ride-hailing company in India; and Lyft Inc., the main Uber rival in the U.S.

Uber has also been merging with local partners, following expensive attempts to win over regional business. Last month the San Francisco-based company and Yandex NV announced they would merge their ride-hailing businesses in Russia. Uber will invest $225 million and take a 36.6 percent stake in the new venture that will be valued at $3.73 billion.

Uber Challenger

Taxify's strategy is broadly to steal market share from Uber in cities from Tallinn, Estonia to Johannesburg by focusing on items like driver pay and training, Villig said. Europe is promising in terms of possible regulatory easing that would unlock markets like Germany and Scandinavia, while Africa has potential to dramatically grow in terms of number of rides, he said.

“Didi didn't have a partner yet in Europe and Africa -- that's where we come in,” said Villig, who described Didi as largely a passive investor, whose investment doesn't entail strategy or management changes at this point.

Despite a number of setbacks in Europe, Uber still dominates key markets, and has been working to win over regulators. It has recently been working with the Estonian Tax and Custom Board on a pilot project on taxation between customers and drivers.

Didi and Taxify declined to disclose the financials of the latest investment. Taxify had raised 2 million euros ($2.4 million) prior to the Didi deal, Villig said.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Molly Schuetz