SOFTBANK Group Corp. 9984 -1.28% , the world’s biggest technology investor, has poured some $20 billion into ride-sharing companies around the globe, including Uber Technologies Inc.
Now, those companies are spending at least some of SoftBank’s money to battle each other.
In Japan, Uber is gearing up to fight China’s Didi Chuxing Technology Co., which is planning to enter the market after an investment by SoftBank of around $10 billion.
In India, Uber is facing off with local champion ANI Technologies Inc.’s Ola, in which SoftBank has about a 30% stake and a board seat. SoftBank invested $7.7 billion in Uber for a 15% stake this year.
Uber and Ola are also grappling in Australia, where Ola started operations in February. Uber in Southeast Asia is trailing Singapore’s Grab Inc., whose president joined from SoftBank in 2016 following its $750 million investment in the company.
“If you’re going to do business with SoftBank, you just have to get used to sometimes their doing business with the competition,” Uber Chief Executive Dara Khosrowshahi said during a visit to Tokyo in February to meet with regulators and business partners.
SoftBank’s goal is to have the startups it invests in help each other, in what Mr. Khosrowshahi described as “the SoftBank family.”
The idea, according to people familiar with SoftBank founder Masayoshi Son’s thinking, is these companies can cooperate on research and development and seek joint ventures as the world moves toward self-driving vehicles.
“If management at Uber, Didi or Grab were to talk with one another and come to an agreement, and in so doing raise shareholder value, we will study that,” Mr. Son said at a news conference recently. “But we will not force them to do anything.”
Venture capitalists say typically they are careful not to invest in companies that compete with each other, because doing so can sow distrust or raise concerns of conflict of interest. Also, the traditional view has been that it makes little sense to fund companies that might cannibalize one another’s revenues.
SoftBank is breaking these rules in part because it has so much money that it is more like “a private-equity buyout firm that’s looking to consolidate a market,” said Vinnie Lauria, a founder of Golden Gate Ventures, a Singapore-based venture-capital firm.
Founded by Mr. Son in 1981, SoftBank began as a software distributor, investing in more than 1,300 companies. Its most famous investment was a $20 million bet in 2000 on a fledgling Chinese e-commerce firm, Alibaba Group Holding Ltd. , which is now valued at about $140 billion.
With SoftBank heavily indebted from its large acquisitions of wireless carrier Sprint Corp. and U.K. chip designer ARM Holdings PLC, Mr. Son last year turned to outside investors to launch the $92 billion Vision Fund, the world’s largest technology fund.
That giant war chest gives SoftBank more flexibility to make global long-term bets on industries such as on-demand transportation. SoftBank executives say they are willing to ride out periods of infighting, which they consider temporary, among their ride-hailing investments and are prepared to wait a decade or more for big payouts.
Eventually, the SoftBank executives say, one ride-hailing company will dominate in each region, and given the magnitude of each market these companies are unlikely to feel the need to expand further. In the meantime, though, the executives say, they wouldn’t mind more cooperation.
SoftBank has limited influence over strategy at the companies it invests in, however: It owns minority stakes and maybe a board seat or two. But for Uber, Didi and the other startups, the extra cash from SoftBank means more firepower to continue battling as they search for global growth.
“While SoftBank may have an opinion, theirs is not the only opinion in the room,” Uber’s Mr. Khosrowshahi said recently during a meeting with reporters in New Delhi. He declined to comment on whether SoftBank was pushing Uber to merge with competitors.
In Japan, one of the few major markets still largely untouched by the global ride-hailing wave due to strict local rules, SoftBank’s desired family ties are already fraying. SoftBank-invested companies Didi and Uber have hit upon similar strategies to tackle the Japanese market, setting the stage for a fight.
Uber is in Japan currently with Uber Eats and a black-cab deployment service. In February, Didi said it would form a joint venture with SoftBank to enter the market and introduce an app to connect riders with licensed taxis instead of regular cars. The move addresses Japanese regulators’ concerns about a gray market of Chinese-speaking drivers that has emerged to transport the millions of Chinese tourists who visit Japan every year and use Chinese-language apps.
Meanwhile, Mr. Khosrowshahi has said Uber will shift course to better tap opportunities in Japan’s $16 billion taxi industry. “Clearly we needed a different way of doing business”—namely, “a partnership with the taxi industry,” he said at an event in Tokyo in February.
In India, Ola is concerned that SoftBank might push it to potentially combine business operations with Uber rather than remain independent, people familiar with the matter said. Ola was founded in 2011, two years before Uber’s arrival in India. Last year, SoftBank participated in a $1.1 billion fundraising round in Ola led by China’s Tencent Holdings Ltd., adding to smaller earlier investments.
Meanwhile, Uber is fighting Grab Inc., another SoftBank-backed opponent, for supremacy in Southeast Asia. Grab last year announced it was raising $2.5 billion in a round led by SoftBank and Didi. Founded in 2012, Grab operates in 178 cities across the region. Uber arrived in the region in 2013 and operates in more than 60 cities, an Uber spokesman said.
“Competition is proving hard to contain,” said Olaf Sakkers, a partner at Israeli venture-capital fund Maniv Mobility, which focuses on self-driving technologies. “It will be expensive to fund both sides of a price war.”- WSJ
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