In yesterday's Global Times Metro Shanghai, guest expat writer Cyril Saidah called the rise of private car services like Didi and Uber "the death knell for pedestrians," predicting that the recent merger of the two companies will result in "insanity in the streets due to a complete lack of competition."
Indeed, with long-gestating rumors speculating that foreign-owned Uber would eventually cede its Chinese mainland market share to local giant Didi Chuxing, last week Uber finally announced that it would be selling its Chinese operations to its more-successful competitor.
The deal, which gives Uber a 17.7 percent stake in Didi's equity, will allow Uber CEO Travis Kalanick to serve on Didi's board and Cheng Wei, Didi's CEO, to join Uber's board. Basically, it's the grand alliance of on-demand mobility (ODM) services.
This is the first-ever case in tech history of a Chinese Internet company not just beating, but generously partnering up with, a Western rival.
Not even any of China's Big Three tech giants - Baidu, Alibaba and Tencent (known collectively as "BAT") - have yet managed to form a successful joint venture with a foreign enterprise.
Didi, one of the most ambitious Internet companies in China, has in recent years single-handedly revolutionized China's transportation industry with its convenient, affordable ride-sharing app and its legions of freelance chauffeurs who now outnumber traditional cab-company drivers.
But its merger with more-expensive yet higher-quality Uber, which failed to dominate the local market after sinking a reported billion dollars into its China venture, is now fueling concerns about what this deal means for common passengers.
Perhaps the most immediate question being raised is if, now that Didi has beaten its biggest rival in mainland market competition, will it become more expensive?
The answer is a probable yes. According to a report by Analysys, Didi and Uber previously held 84.2 percent and 17.4 percent respectively of the domestic ride-hailing market coverage of active users (as of the fourth quarter of 2015).
The new merger hands Didi 90 percent of the market, which many analysts are calling "a virtual monopoly."
According to Chinese media, Didi reduced its rewards for drivers by 80 percent immediately following the merger. Scumbag CEO or just bad timing?
The truth is that both Didi and Uber had been quietly lowering their driver subsidies over the past few months, as their current "burning money" business model is highly unsustainable. It was only a matter of time.
Nonetheless, it is reasonable for drivers and passengers alike to be concerned that, now that Didi has nothing to fret about, price manipulation may become the new normal for this industry leader.
All big companies do it once they have established their market dominance and built a customer base dependent on their product or service.
Not to worry, ordinary passengers like you and me still wield massive power over Didi, as China's ODM sector is in its infancy and not yet as popular as public transportation. Hundreds of millions of people still ride buses, subways, bikes and even traditional taxis more than they use ODM.
Until Didi proves itself as reliable and affordable as mass transportation, it's highly unlikely that commuters will immediately switch en masse to private car services.
Some analysts are calling on China's central government to get involved in Didi's so-called monopoly, but as of yet there's little reason to need any official regulatory policies against ODM.
In fact, just last month Beijing granted official legal status to car-hailing services in China.
Under the new regulations, ODM companies must submit an application to corresponding local administrative departments in the intended area of operation.
This will give each city government full power to decide, based on a variety of factors such as traffic conditions and economic status, whether a ride-hailing company should enter their market or not.
Instead of trying to either restrict Didi or give it de facto privilege, the best thing China can do is encourage even more new private car services, which will stimulate competitive pricing, quality control and customer satisfaction.
This will force Didi to stay affordable as well as continuously renew its business model. That should put passengers like Cyril Saidah at ease about whether the monopoly will make Shanghai's streets even more unsafe.
