Didi announced today that it received $1 billion in strategic investment from the Cupertino, California-based Apple as part of an ongoing fundraising round. The two companies closed the deal with“lightning speed” after first meeting each other in Apple’s U.S. headquarters on April 20th, Didi President Jean Liu said in a press call. Liu said she is confident about future partnerships in products, marketing, and technologies, but declined to reveal more details.
“We will have many more collaborations down the road,” she said.
For Apple, partnering with Didi represents a good opportunity to promote its entertainment and payment services at a time of slower iPhone growth, analysts say. The cooling market in the Greater China area, which includes Hong Kong and Taiwan, was the primary reason behind Apple’s first decline in quarterly revenues earlier this year. Revenue from Greater China fell $4.3 billion to $12.49 billion in the second quarter, when overall sales dropped 13% to $50.55 billion.
Apple can offer its data and music services to Didi’s 300 million passenger base spread across almost 400 Chinese cities through the Didi app and in-car displays, which later can lead to increased usage of Apple Pay, says Zhang Xu, an analyst at Beijing-based consultancy Analysys International.
Currently, consumer awareness of Apple’s entertainment and payment services are very low in China as people associate it with a mere hardware company, according to Nicole Peng, a research director at market research firm Canalys.
“Middle-class consumers in China have a very, very low awareness of Apple’s services,” Peng says. “Partnering with Didi might change that.”
Chinese regulators dealt a blow to Apple last month when they abruptly shut down the company’s online book and movie services, a move that came amid increasing control over the country’s media sector. Authorities haven’t explained why they banned iBook and iTunes Movie or when the ban will be lift.
When asked if Didi can help Apple with government relations, President Jean Liu said this deal is a “good foundation where we can help each other in many ways” although she did not elaborate on details.
Didi, backed by Chinese web giants Alibaba and Tencent, also counts sovereign-wealth fund China Investment Corp. and the investment arm of financial conglomerate Ping An Insurance as investors. It is reportedly raising funds at a valuation that could reach $25 billion.
“Didi Chuxing has investments from Tencent and Alibaba, so investing in Didi can help Apple collaborate with Chinese Internet giants,” says Travis Wu, a research director at market research firm Forrester.
Another long-term collaboration could be in artificial intelligence. Didi is recruiting top scientists in artificial intelligence and machine learning to reduce errors in estimated vehicle arrival times and predict passenger demand, according to He Xiaofeng, president of Didi Research, in an interview last month. “Technology will be the priority of future investments,” said He.
Analysys’s Zhang says Apple can certainly add to Didi’s AI capabilities by bringing advanced technologies. Didi meanwhile can share data on traffic and passenger behavior with Apple to facilitate its research in autonomous driving, Canalys’s Peng says.
