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John Wang
January 4 14:19

Grab and Gojek – when Asian ecosystems clash

  A progressive competition?
The idea behind Grab’s first breakthrough has been inspired by Uber’s Ice Cream Day. In 2012 American ride-hailing giant allowed its customers to order ice cream via its drivers. In 2015 Anthony Tan and Hooi Ling Tan have localized this feature to Malaysian needs. Their drivers began delivering durians – the fruit of choice in the region, known for its strong aroma – in tight packages and for a low price. Service also introduced a much-needed feature – cash payments for many bank-less consumers.
Local innovations like this one has led Grab to expansion to seven other countries, employing 2.8 million drivers and even acquiring the local division of its main competitor – or, maybe, a muse – Uber. In 2018 Grab’s revenue has amounted to US$1 billion. It is expected to be twice as much this year.
The company’s ambitions do not stop there – its leadership has a next big thing in mind. Tan is planning the creation of a super-app, where users can shop, order taxi and delivery, get payment and even medical services. This gigantic set of services is supposed to generate not only direct revenue, but also data about users and their consumer habits. The idea raised sufficient interest from investors. Grab has managed to secure over US$14 billion in funding from Microsoft, Softbank and Toyota.
Super-apps have already proven to be effective model of distribution for digital services. The model is used productively by Tencent and Alibaba, Facebook is aiming at trying the framework out. But Southeast Asia is only beginning to experience this new environment, and Grab is likely to take the prize. But there is another pretender.
Go-Jek is and Indonesian company with a similar model of operations. It offers many services aside from taxis: groceries delivery, makeovers, cleaning and even massages. It also has over 25 million active monthly users and a stable foothold in the region’s most advanced country – at least tech-wise. The company’s founder Nadiem Makarim went as far as accusing Grab of stealing his ideas.
At the moment Grab has an advantage in numbers and resources. It’s acquisition of Uber’s local division gave the company a hegemony in ride-hailing in Vietnam, Malaysia, Singapore and the Philippines. However, Go-Jek has backing from Google and has managed to secure US$3.1 billion in funding, which brought it to an estimated valuation of US$11 billion.
The leaders of competing companies knew each other well even before their clash. Tans and Makarim took the same course in Harvard and became friends. They shared a frustration with Southeast Asian system of transportation, which they decided to fix – in two separate ways.
Both companies draw inspiration from China – Alibaba and Tencent are especially prominent examples to emulate. Grab and Go-Jek want to create their own ecosystem of mobile services that could potentially rival social media and search engines in data mining. There are obvious privacy concerns, but that is not the biggest problem for two competitors.
Banks in Southeast Asia are significantly less accessible than in China. There are many technological  and geographical reasons, that are difficult to overcome. Grab and Go-Jek are currently fighting it with digital wallets assigned to each customer. This compromise proved to be problematic for Grab, since Indonesia has banned digital wallets for companies with over 49% foreign ownership.
And the base of both companies – taxi services – are turning into a national problem. In October a group of drivers started a full-scale riot over Grab’s policies.
Factors like these make the future of the competition. According to some analysts, the companies might even merge together. One way or another, this dynamic is pushing the regional progress forward.