Ola gets $1.1b funding; along with Uber, faces Meru hurdle

In order to continue its aggressive growth in the taxi market, Ola has raised $1.1 billion in its latest round of funding from Tencent Holdings and Softbank. It is also in the process of raising another $1 billion.

The latest round of funding in Ola was led by Tencent, a leading internet company in China, and was participated by existing investor Softbank. With additional funding coming in, the total funding in the current round would be over $2 billion. But despite the latest round of funding, things are not exactly hunky dory both for Ola and its rival Uber in India.

Both are facing legal hurdles in the market with Meru Cab approaching the Competition Commission against their “predatory pricing.” Meru Cabs has filed cases with Competition Commission against Uber and Ola in six cities. In Bangalore, Meru has further appealed to National Company Law Tribunal (NCLT).

“Each city is considered as a different market and so we have filed six cases. We have contended that the taxi aggregators are using their dominant position and money to adopt predatory pricing, which eliminates competition,” said Nilesh Sangoi, CEO at Meru Cabs.
“In the Bangalore case, though the Competition Commission acknowledged that ‘below variable cost pricing’ has happened, Indian laws interpret only one company in the dominant position,” Sangoi said.

With its latest round of funding, Ola will be making strategic investments in supply, technology and cutting edge innovations to build for the country’s unique transportation needs. The company will make significant technology investments into artificial intelligence and machine learning capabilities. It also wants to double its penetration, the company said. Ola is currently present in 110 cities across the country with over 14 categories, including auto-rickshaws, bikes and different cab services.

“We are thrilled to have Tencent Holdings join us as new partners in our mission to build mobility for a billion Indians. The transportation and mobility industries are seeing huge changes globally. Our ambition is to build a globally competitive and futuristic transportation system in India that will support and accelerate a nation on the move,” said Bhavish Aggarwal, co-founder and CEO of Ola, adding, “Our new partners share our passion for building the future of transportation in India together and we look forward to learn and benefit from their global perspectives and ecosystems.”

But the market views the situation to worsen further if Uber and Ola merge into one entity. Softbank is the leading investor in Uber’s main rivals in many markets. It has invested in Didi Chuxing in China, Grab in South East Asia, 99 in Brazil and Ola in India.

Softbank’s Masayoshi Son had recently evinced interest in investing in Uber and this would see these players merging with Uber in their respective markets.

Taxi service providers like Meru are under threat of being eliminated if the two dominant players merge to make one large entity.

Sangeetha G.