It wasreported that in the middle of January this year, Google (through Alphabet,it’s parent company) is investing in an Indonesia-based ride hailing start-upcompany, Go-Jek. Though the detail of the investment might will not bedisclosed, it was reported by Reuters that the funding is a part of $1.2billion joint fundraising along with Singapore’s Temasek, and China’sMeitua-Dianping. Before investing in Go-Jek, Google has been investing in otherride hailing companies, namely Uber and Lyft, also through Alphabet. While therelationship between Google and Uber has now become a battle in the court,Google shifts the investment to other ride hailing start-ups, Lyft and Go-Jek.Google’sinvestment to Southeast Asia region is not without reason. In a report titled”e-Conomy 2025 Southeast Asia” authored by Google and Temasek, this regionshowed an incredible growth in internet economy, exceeded the expectation in2017 by 35%.
The region is now the third largest number of internet users inthe world, estimated clocking at 330 million users by the end of 2017. Theinternet-based spending in the area is dominated with four main segments: ridehailing, online media, online travel, and E-commerce. While online travelcontributes for most of the spending, ride hailing shows the highest growthcompared to others.
WithIndonesia as the largest share holder of SEA’s economy with share of revenue atmore than 40%, the competition in the ride hailing segment becomes one of themost competitive one. Battling in Indonesia are Uber, Singapore’s Grab, and thelocal start-up unicorn, Go-Jek. With Google backing up Lyft, it seemsunderstandable why Google chose Go-Jek. Lyft is a company based in San Francisco,California with service available across 300 U.S. cities and in December 2017expanded to Canada. While Go-Jek is a local company with service available in50 cities in Indonesia and has been planning to expand the market to Philippinesand other SEA countries in 2018.
Meanwhilefor now, Uber and Grab have SoftBank as one of their main investor (SoftBank isalso on the board of both companies). In a recent interview with FinancialTimes as also reported by Bloomberg, Rajeev Misra, a Softbank executive joiningUber’s board, suggested for Uber to focus on core markets such as the U.S.
,Europe, Latin Amerinca, and Australia. Yet the new Uber CEO, Dara Khosrowshahiseems to not be very keen on the idea, as he said in an interview at Davosreported by Bloomberg, that the company would be “leaning forward” to expand.For now,the ride hailing market in Indonesia is still dominated with promos and incentivesto attract customers as well as drivers. The investment from Google can be usedby Go-Jek to strengthen its widely varied services. In Indonesia, ride hailingservice is on high-demand, especially in big cities such as Jakarta and Bandung.
With its varied services, Go-Jek can be more of a central part of peopleeveryday life. It can also pave a way for brands to find its way to be closerto the consumers.