I have a feeling that they had not anticipated the level of the competition in Russia, where the cabs were such unbelievable scams that the locals had launched mobile-first services long before Uber entered the market.

It's a moot issue. There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term. Uber is fortunate if they come away from Russia with anything. In most industries Putin is reluctant to allow even his own oligarchs outright control. The notion he'd allow Uber to own their taxi / ride-hailing business is laughable (even assuming Uber could compete well enough).

> There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term.

You're probably right, and I wouldn't be surprised at all if the government passed a law enforcing that some day.

But - in this particular case, I have to say that Uber had nothing on Yandex, who has been in the Russian maps and taxi business far longer and their navigation app is absolutely top notch (you should see how it lays out the route, and the funny jokes the navigation voice cracks when you're stuck in traffic), as well as their taxi app. Yandex is a very clever company and infrastructure questions aside, they are hard to compete with.

In fact, I'd argue that Yandex's technology is better in some respects than Uber or Apple's and Google's (if we're talking maps) but you will not see Yandex taxi service in the USA for the exact same reason you've stated, in the US it will be a US company.

BTW, Google is only #2 search engine in Russia as far as I know, simply because Yandex is better. I often find myself checking ya.ru when searching for Russian words when Google comes up empty.

> ... funny jokes the navigation voice cracks when you're stuck in traffic

I guess that we've been using different products.

You can use public pins on the map to communicate with other drivers and sometimes it's entertaining to read them. However, in my case the navigator's voice did never joke or tell anything it should not tell. Navigation is not a toy.

Uber never dominated in Russia.

I talked to Moscow taxi drivers on more than one occassion and they were dismissive of Uber as an older and inferior iteration of what Yandex.Taxi was doing. Uber was never at the top, but at a fairly distant second, so their minority-shareholder "merge" with YT is of no surprise.

> fairly distant second

Gross bookings approximately half that of Yandex and more cities than Yandex doesn't sound like a fairly distant second especially since Uber arrived well after Yandex. Uber was doing better against Yandex than Lyft is doing against Uber. Approximately a 40% stake in the new venture and 3 of the 7 board seats appears to be a testament to Uber's relative strength against Yandex.

> There was no scenario under which a Western firm was going to be allowed to dominate any meaningful Russian infrastructure long-term.

I think that's not quite true. The industry (oil, car manufacturing, software, etc.) is pretty much dependent on the Western products and tech.

Besides Uber, GetTaxi is quite popular in Russia. And there are more local similar taxi services besides Yandex, but they are less known. In general, Uber and Yandex are the most popular at the moment.

> pretty much dependent on the Western products and tech.

There is a big difference between being dependent on Western products and tech and owning/operating those Western products and tech. I guess the risk of backdoors is still there, but if you own and operate everything, you can implement security that mitigates these risks, and the alternative of not having access to the tech at all is untenable.

The real privacy and national security concerns with ridesharing are on the demand side, and AFAICT this deal lets both companies retain control of their demand side. Ultimately, this deal allows Yandex control over the information of Yandex customers and Uber control over Uber customers.

> Uber is fortunate if they come away from Russia with anything

"Uber will invest $225 million and take a 36.6 percent stake ... Yandex will invest $100 million and own 59.3 percent"

If they are paying twice as much as their partner for a minority stake I am pretty sure they will not be coming away with anything.

The whole thing "will be valued at $3.73 billion", so it's perfectly possible that the total contribution of Yandex (cash and non-cash) is much larger than the contribution of Uber.

If you read other articles you can see that Uber spent 170M in Russia till now. Along with this 225M its a total 395M of spending. And now they got 36.6% stake in a company (now a leader in Russia) worth 3.4B. So Uber got 1.4B. How is that not coming out with anything? Uber did same thing in China. While we all think they lost in China, Uber seems to have spent around 2B or so but got away with close to 8B stake in Didi (leader in China). Any investor will be happy with those returns.

They own a minority stake in an entity that has to pay Yandex for infrastructure, licensing rights and advertising which Yandex controls.

So this entity racks up a lot of debt (to Yandex) while making transfer payments to Yandex and then in a few years: "whoops, bankrupt!"

Now the equity holders (Uber) get wiped out and the company re-organizes and sells its assets (to Yandex) to pay off its debts (to Yandex) and Uber gets nothing.

Oh, NO! That's not legal! That's not fair! Good luck in Russian court buddy.

They are losing everything. They are burning another $225M to forestal the inevitable and pretend like it is not a complete loss but it is only a matter of time.

Yandex.taxi is a service provided by Yandex. The deal talks nothing about licesing agreement for Yandex infrastructure (maps etc). So the claim you make above is under premise that ride sharing will not make money at all and money spend on infrastructure will be far more than what ride hailing can generate. So if this assumption is wrong then we are in different argument on whether ride hailing is a sustainable business at all. Every investor is investing hoping ride hailing will be a profitable business. If it is then this combined entity has more to gain than lose.

I am not saying that the business is not profitable. I am just saying that Yandex is going to take it all.

If Yandex can take Uber's stake, which is worth billions as you say, they would be stupid not to, and they can, so they will.

The overall company is worth $3B though, right? Seems like a good deal for Uber since they do half the revenue of Yandex. Uber was never going to be allowed to win Russia and they can lower the money they were pouring into Russia, sans this one time $225M. Probably save more from however much they were hemorraging. Just like with the Chinese merger, I think this is a good thing. Gets Uber to stop burning so much money.

From the article:

> In Russia, Yandex.Taxi has gross bookings of $1.01 billion on an annualized basis, while Uber had $566 million, according to a presentation prepared for investors.

Two companies will be merged (in Russia), but the brands will stay. The investment-stake asymmetry is probably due to the difference in the gross bookings.

I often think how better off Uber would have been had they stayed away from markets which no sane company would chose to compete in until, at least, a few years of founding, let alone an operation-heavy company like Uber. In India, autos are already way inexpensive and customers are too price-sensitive to prioritise service. Although, Uber has become the dominant one here but it'll take a while to understand how profitable the bet on India was.

Travis didn't just want to dominate the industry, he wanted to dominate the world: a megalomania to a whole new level.

What about Gett?

So true.

I think you're oversimplifying Russian Taxi market a great deal.

First of all, you're saying that mobile-first services were launched because cabs were crap. The market was good because the market was bad?

Medium-size cities had very cheap fixed-rate taxi-by-telephone services. Like, whole city flat rate for $3 in driver's own old beater.

Meanwhile Moscow had awful taxi services (very unreliable and expensive) and you had better luck just lifting your hand when near the road (yes, that's how it actually worked).

Then Yandex launched their Taxi and reliability of service rose very fast while prices fell. Then, GetTaxi and Uber also entered market, as well as some smaller players like Maxim and Saturn. Yandex is still heavily focused on Moscow with unreliable coverage everywhere.

Uber got very dominant in market share in Moscow with all its subsidized rides. I paid 200USD for 30 rides! This is not sustainable...

When I was in a small city outside Moscow I was paying $1.50 for a 1 min of a phone call and $1.40 for 10 mins cab ride. It was cheaper to take the cab and talk to someone than to make a call.

Did you call Alpha Centauri? Did you use Russian service provider?

You haven't seen their prices in T2 cities, it is like $1 per 5 to 6 kms. And they have the problem of "Uberists" - people who drive themselves around when Uber subsidizes rides. And they also have issue of botters who do the same, but at industrial scale (without actually driving themselves or anybody else of course)

So they have two phones, one for driver and one for customer, and they request rides and accept themselves? Clever.

How does the driver ensure that he will receive his own order? AFAIK, a driver can reject an order, but this action will badly affect his rating in Uber's system.

I think that the rating system helps at least partially to fix this exploit (if it actually is an exploit and not a fantasy).

If you don't receive your own order, have the passenger phone cancel the request and try again. I doubt the utilization is high enough that turning on the driver app immediately accepts a random request.

Amusingly, that's comparable or slightly lower than what I'd have to pay for a Auto (tuk-tuk) ride here in India.

I'm from Bucharest, Romania. The average price here is something like $0.35 / Km and the price I'm paying for a ride is somewhere between $2.5 and $5.

And that's the price of Uber as well, which can go up in rush hour, but we now have Taxify as well, which I prefer because their prices are more predictable.

So when you're saying that you paid $200 for 30 rides, that seems expensive to me.

Seems like a smart move to me. Given the political situation, operating at scale in Russia is a liability anyway. Now they get some cash and a stake in the Russian controlled operation.

Maybe relevant: http://englishrussia.com/2017/05/31/russian-airport-taxi-dri...

Damn. I used both and Uber is cheaper and much better customer service. Trying to get your money back from Yandex.Taxi is a kafkaesque nightmare.

I don't get it. What money back? For non satisfactory service? Or for not providing the service you paid for?

For example I had a case where a driver did not finish the ride when I got out of the car and did so 30 minutes later in some random location, and I got a huge bill. I also had a driver refuse me to drive me to the destination in the middle of a ride, I also refunded that. Not that Uber drivers don't do shit like this, but I found them more professional. Now that the two companies merged, it's gonna be the worst case scenario with monopoly-driven prices and shit drivers.

Oh, now I get it. However, aren't you forgetting that a lot of Uber drivers in Russia were or are still driving with Yandex Taxi and Uber concurrently?

Uber does not really do anything special to ensure this professionalism in Russia except a brief screening, AFAIK.

That's why I don't think that anything will change from rider's perspective.

In Moscow none of Yandex.Taxi drivers drive their own car. They drive a yellow Yandex.Taxi car with standartized livery. A lot of them have zero knowledge of the streets. I took a ride to the airport once and the driver didn't know how to use the toll road. I (who never owned a car in my life) had to explain how to use the damn thing. This is the quality of drivers we're dealing with here.

I think OP is agreeing with you. The drivers were not better quality, per se, but Uber's customer service was.

Can anyone tell me what would happen to Uber's stake in the joint company if Uber fails? Is it auctioned off to cover its debts?

If by "fails" you mean goes into liquidation then, essentially, yes. Uber's JV stakes, like its other assets, would be used to make creditors while (under the supervision of a bankruptcy judge).

If you can't beat em, join em.

Uber got itself into its own 'LeEco moment'