(Article was updated on December 3, 2020 at 4:22 p.m.)
In the past few years, Grab Holdings and Gojek have been embroiled in a long and expensive battle for supremacy in the Southeast Asian region.
According to annual filings, Grab burned cash and lost more than $ 200 million in 2019.
To solve this problem, a merger between the two giants Ride-Hagel and Food Delivery has been in the works since last year.
According to The Straits Times, Grab and Gojek made “significant progress” yesterday (December 2nd) in working out the terms of the transaction.
One structure with significant support envisages Anthony Tan becoming the combined company's CEO while Gojek executives would run the business in Indonesia under the Gojek brand, The Straits Times reported.
The ultimate goal is to become a publicly traded company, but the two brands can operate separately for an extended period of time.
On Thursday (December 3), Grab informed its employees in an internal note that "the company is in a position to make acquisitions".
"Our business is doing well and, as with all market consolidation rumors, we are able to acquire them," said Anthony Tan, Co-Founder and CEO of Grab.
While some details have not yet been finalized, those with knowledge of the conversations have stated that the two startups have managed to reduce some disagreements.
Both Grab and Gojek declined to comment.
The largest internet merger in Southeast Asia
Photo credit: CNBC
Currently, Grab and Gojek are considered some of the largest startups in Southeast Asia.
Grab is represented in eight countries and was most recently valued at more than USD 14 billion (S $ 18.75 billion), while Gojek is present in five countries and is worth USD 10 billion (S $ 13.38 billion) $) has.
The potential merger is said to be the "largest Internet merger in Southeast Asia".
Investors have long been pushing for the two startups to join forces across Southeast Asia. Masayoshi Son of SoftBank Group, a major Grab investor, is also currently involved in the merger talks.
According to The Straits Times, SoftBank has been pushing for the deal since Masayoshi visited Indonesia in January.
What a Grab-Gojek merger in Singapore will look like
Photo credit: Entrepreneurs
First of all, Singaporeans may be able to see more of Gojek's functions in Singapore.
Gojek currently only offers hail drives in Singapore, but offers over two dozen functions in his native Indonesia.
Although Gojek has unplugged some of its GoLife services, some features have been retained, including GoMassage (spa and massage) and GoClean (house cleaning).
In an interview with TODAY, Gojek's general manager Lien Choong Luen stated that bringing these services to Singapore is always a "commercial decision" and that the company will continue to explore such options.
In addition, with Grab and Gojek no longer facing any significant competition in the arena, they are unlikely to be issuing promotional codes to attract new users to the platform, as they used to be.
It will therefore be important for the Singapore government to comply with its antimonopoly laws to ensure that consumers and other businesses are protected from anti-competitive practices.
With these laws it is possible for more players to enter the scene.
Right now, transportation apps are already rolling out quickly, and around half a dozen new apps will be rolled out in just a few weeks.
What's in it for consumers?
Image credit: Wired
Many Singaporeans can probably remember the days when Grab and Uber had a price war in the country.
In 2016 – the days when Grab faced stiff competition from Uber – consumers were heavily rewarded with a series of promotional codes from both hail-fighting companies.
Both companies used predatory pricing, where they set the cost of a service (i.e., rides) at a price that was lower than the marginal cost to the seller.
In this way, both companies have been able to keep travel costs down for passengers while increasing the commitment to low-cost journeys – all with the unique goal of eliminating competition.
When Grab took over Uber's Southeast Asia business in March, both companies were fined a total of $ 9.5 million after it was found that the merger agreement violated Singapore's non-compete agreements.
The deal was deemed "anti-competitive" by the Singapore Competition Commission after months of investigations into the merger.
Similarly, Grab and Gojek are likely to monopolize the market that will not benefit consumers.
While the merger will be beneficial to both companies in order to drive costs down, it is important that the government ensures that regulations are in place to protect consumer interests.
Selected image source: Kompas Tekno / SBR