Assessing Saudi Arabia's stake in Uber
The smartest insight and analysis, from all perspectives, rounded up from around the web:
"In its quest to build a global empire," Uber is turning to a Middle Eastern monarchy for help, said Mike Isaac and Michael J. de la Merced at The New York Times. The ride-hailing juggernaut announced last week that it has accepted a staggering $3.5 billion cash infusion from Saudi Arabia's sovereign wealth fund — the largest investment ever made in a private company. The money will help fuel Uber's expansion in the fast-growing Middle Eastern ride-sharing market. Uber currently has some 395,000 riders in the Middle East, up fivefold from last year, and 19,000 drivers. For Saudi Arabia, which rarely makes venture capital investments, the stake will diversify its economy "away from oil."
"I'm on the record as liking Uber," said Dan Primack at Fortune, but "not after this." The company is taking money from a government that effectively bars women from driving, "let alone driving for Uber." This is a regime that requires women to have male guardians whenever they leave the house and imprisons men for homosexuality. Plenty of companies do business with problematic governments, but "this is no passive investment." Yasir Al Rumayyan, managing director of Saudi Arabia's Public Investment Fund, will join Uber's board as part of the arrangement. "To my knowledge, no other Silicon Valley startup has a director from the sovereign wealth fund of a repressive political regime."
"The Uber deal actually empowers Saudi women," said Faisal Abbas at The Huffington Post. Eighty percent of Uber's customers in Saudi Arabia are female; they use the app as an "immediate and practical workaround" to the kingdom's de facto driving ban, including to get to work. Summoning an Uber is far easier than using the country's "sadly unreliable" public transportation, and safer than hailing a traditional taxi. Uber insists the investment aligns with Saudi Arabia's plan to increase the share of women in the workforce to 30 percent by 2030, said Aidan Quigley at The Christian Science Monitor. "Of course we think women should be allowed to drive," said Jill Hazelbaker, an Uber spokeswoman. "In the absence of that, we have been able to provide extraordinary mobility that didn't exist before."
Uber's move is actually "bad news for the global economy," said Timothy B. Lee at Vox. The company has now raised $11 billion in just six years, but the bulk of that money isn't being devoted to building factories or machinery. It's being used to fund "brutal, zero-sum price wars with competitors around the world." Uber is willing to lose cash on every ride, for years if necessary, to put rivals like Lyft or China's Didi Chuxing out of business. The result? Huge monopoly profits for Uber's private investors, but "nothing of lasting value." If Uber CEO Travis Kalanick has shown us anything, it's that he's not afraid of negative publicity, said Megan McArdle at Bloomberg. Odds are most people won't remember or care that Saudi Arabia is an investor the next time they open Uber to hail a ride. "Color me skeptical that this criticism will matter much" over the long haul.