By the Wall Street Journal
SoftBank Group Corp., 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. In Southeast Asia, Uber is trailing Singapore’s Grab Inc., whose president joined from SoftBank in 2016 after 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 US wireless carrier Sprint Corp. and UK 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 tolerate 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. Meanwhile, 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 controls perhaps 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.