SINGAPORE (Apr 2): In a week in which fears of a trade war dictated market sentiment and spurred volatility, news of homegrown ride-hailing service provider Grab buying out Uber’s operations in eight Southeast Asian countries came as a welcome change. And not just because it is the largest-ever deal of its kind in this region.
I have previously talked about how the network effect and near-zero marginal cost, particularly for digital-focused tech companies, would eventually result in the creation of natural monopolies, on a global scale. We see this playing out, most successfully out of the largest markets (the US and China), in the cases of Amazon.com and Alibaba Group Holding.
The Grab-Uber deal underscores an opposite force to the network effect. It is a timely and important reminder that localisation and customisation can compete and succeed against a global player. It is affirmation that in-depth knowledge and understanding of the local environment as well as the lifestyle and demands of customers are still invaluable competitive advantages.
