Uber’s competition in Japan heats up thanks to Didi, Softbank, and Toyota

Uber has long had a tumultuous relationship with two of its major Asian investors, and now things are getting more complicated still. SoftBank is the investor that was at the heart of a 2017 kerfuffle that involved the entire Uber board and then-CEO Travis Kalanick, while Didi was once Uber’s main rival in China before it managed to oust the San Francisco-based company from the country altogether. The two entities are now teaming up, but it’s not for Uber’s benefit. Rather, Didi and SoftBank are working together to bring ridesharing services to Japan. And yes, that will directly threaten Uber’s business in the Asian nation.

To make matters worse for Uber, news also broke late last week that Toyota will be pouring money into yet another Japanese competitor. The carmaker has agreed to invest 7.5 billion yen ($69 million) in JapanTaxi, currently the closest thing to Uber in Japan. Already, JapanTaxi’s app has been downloaded around four million times, and has 60,000 taxis registered with the service (about 25 percent of all taxis in the country). While Uber doesn’t provide numbers regarding its market share in either Japan or elsewhere in Asia, it’s said to make up less than 1 percent of Tokyo’s — the country’s busiest metropolis —  taxi market.

It’s unlikely that Uber will be able to make up much ground in Japan, especially now that Didi is making moves throughout Asia. Early in 2018, Didi moved into the Brazilian market after acquiring local service 99, and has also recently moved its services to Taiwan by way of a franchise. And as we reported last December, Didi raised a $4 billion funding round with the main goal of international expansion.

SoftBank’s involvement is a little trickier. The Chinese financial giant is Uber’s largest shareholder, following its $1.1 billion direct investment and its $7.7 billion total investment. To be fair, investors often back multiple companies in the same space, but even so, the decision to create a competitor to rival an investment is a bit surprising.

In any case, the Didi and SoftBank partnership is bringing expansion opportunities to Japan. Pilot programs will soon take place in Osaka, Kyoto, Fukuoka, Tokyo, and others.

“Didi and SoftBank will diligently study local market conditions and policies, and will actively engage with industry practitioners, policymakers and other stakeholders, with the aim of building an open and inclusive platform that will be available to all of Japan’s taxi operators,” Didi said in a statement.