Uber is giving up its ambitions of becoming a dominant force in China's ride-hailing industry.
In agreeing to sell all its operations in China to Didi Chuxing, Uber has done something unusual: concede to a rival.
The value of the deal, confirmed by the company today hasn't been revealed, but whatever that agreement, both companies just saved themselves millions (if not billions) of dollars.
Uber's attempt to establish itself in China, where many other western companies have failed, saw it grow to around 150 million trips per month – but even with that sort of scale, it wasn't making any money. Battling a market incumbent, which Uber is used to doing, is an expensive business.
Uber founder and CEO Travis Kalanick said that the decision to leave China was about "listening to your head as well as following your heart". He added that both Uber and Didi were investing "billions of dollars" in China without turning a profit.
"Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term," he added.
The structure of the deal, according to Recode, are complex. Uber China becomes part of Didi and in exchange Uber gets 20 per cent of the value of the whole of Didi (now around $35 billion, £26.5bn) and Didi will invest in the wider Uber company.
On the surface of things, it's a win-win for the both companies. Ending the 'war' saves money and allows them to pool their huge customer bases. How well Uber's decision will be received outside of China remains to be seen.
Outside China Uber has other battles on its hands with companies such as Lyft and Ola, both of which Didi also holds investments in. The real winner here could well be Didi, which now has investments in every major player in key markets.
This article was originally published by WIRED UK
