Like the rest of us, Uber doesn’t want to spend too much more time thinking about Russia.
The ride-hailing giant is combining its business with Russia’s Yandex to form a new company in eastern Europe valued at $3.7 billion, Uber announced Thursday.
Uber is tossing in $225 million for the new company and hold on to 36.6 percent ownership.
Yandex will contribute $100 million and get 59.3 percent, meaning it will control the company but have plenty of coordination with Uber.
The deal is similar to Uber’s approach in China last year. In August 2016, Uber merged its Chinese business with its top competitor Didi Chuxing. Uber had been bleeding money in China. Instead of continuing to fight Didi, it opted for a stake in Didi’s venture.
These two moves highlight how Uber’s once-global ambitions have been pared back as it has encountered challenges in dominating foreign markets in the same way it has succeeded in the U.S.
In eastern Europe, Yandex had the home team advantage. The tech company does a lot more than just ride-hailing and could use its dominance online to battle Uber.
"Combining Yandex’s local expertise in search, maps and navigation with our leading global experience in ridesharing will enable us to build the best local services and provide a credible alternative to car ownership across the region," Pierre-Dimitri Gore-Coty, head of Uber’s business in Europe, the Middle East, and Africa, wrote in a letter to Uber employees.
Uber entered Russia with a launch in Moscow three-and-a-half years ago. Today, its service is available in 16 cities in Russia and five cities in Azerbaijan, Belarus, and Kazakhstan. Yandex’s service, Yandex.Taxi, also operates in Armenia and Georgia.
With Yandex’s business, the new, as-yet-unnamed company will operate in 127 cities, compared to Uber’s 21. Uber has spent $170 million on the eastern Europe market since 2014, the company said.
"Since founding Yandex.Taxi in 2011, we have connected tens of millions of riders and drivers to become the largest and most trusted ridesharing business in Russia and neighboring countries," said Yandex.Taxi CEO Tigran Khudaverdyan, who will serve as CEO of the merged company. "We are excited to expand on this foundation in collaboration with Uber.”
Uber and Yandex.Taxi will continue to operate their own apps under their own brands, but drivers will experience the new, combined company as soon as the deal closes. The deal applies to Uber’s ride-hailing business, UberEATS, and Uber’s logistics service.
It took a while, but Uber is finally conceding some parts of the world on its way to global domination.