Technology First Look

Uber battle: How Indonesia's taxi drivers are forging a ride-hailing resistance

Indonesia's largest taxi company is teaming up with a local taxi-motorcycle service in an effort to beat back ride-sharers like Grab and Uber.

Three-wheeled motorized taxis called "bajaj" take part in a protest against competition from ride-hailing apps such as Uber and Grab at the main business district in Jakarta, Indonesia, on March 22, 2016.
Achmad Ibrahim/AP
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Caption

A lot of Indonesians need cab rides. The question is, who’s going to pick them up.

Local moto-taxi ride-hailing service Go-Jek launched on Thursday a new arrangement with traditional taxi operator Blue Bird, incorporating its fleet of 23,000 cabs into its own services in Jakarta, according to Mashable. That means co-opting one of the most forceful opponents of ride-hailing services – in Jakarta, thousands of Blue Bird drivers have in the past blocked major arteries in protest of the services’ entry into the local market.

The announcement came the same day as Grab, the Singapore-based ride-hail, said it is investing $700 million in Indonesia over the next four years, reports The Wall Street Journal. The investment will go toward a research and development center in Jakarta with 150 new engineers, a $100 million investment fund for local finance tech companies, and the expansion of GrabPay, its mobile-payment service.

Indonesia represents Grab's biggest market. But it’s also considered fertile territory by rivals – the market for ride-hailing services are expected to reach $5.6 billion by 2025, and Uber has a presence in several Indonesian cities along with a foreign investment company in the capital.

That multi-party wrangling over market share seems to pose an alternative vision to other, more two-sided fights over the future of urban cab services.

In November, The Christian Science Monitor’s Ben Rosen reported that a case against Uber had reached the highest court of the European Union, where ride-sharing apps have been met with perhaps the most substantial resistance:

With an estimated value of $68 billion, Uber and its ongoing battle with the taxi industry has been at the center of this controversy. 

“The biggest impact,” Schor writes about the taxi industry, “is likely the erosion in the value of [taxi drivers'] medallions, the licenses they must possess to operate, because these medallions yield pure rents.”

In Paris, for instance, traditional taxi drivers enjoyed a monopoly of privilege and power, Dominique Andolfatto, a professor of political science at the University of Bourgogne, told The Christian Science Monitor last year. But now, frustrated with the current system, many younger French citizens, in particular, are embracing economic deregulation.

“What’s interesting is that Uber has accomplished something that we thought would never happen in France: digital innovations are inciting change where politicians have failed to do so,” David Viret-Lange, the chief information officer at French telecom giant Orange Business Services, told the Monitor. 

Indonesia’s market would seem especially dynamic in comparison, perhaps in part because of how people are getting around: in addition to cars, Grab’s services include a motorbike-pooling service; Uber also recently added a two-wheeler service called UberMotor, as well as chauffeur-driven rental cars in Bali, reports the Journal.

As the Monitor’s Lonnie Shekhtman wrote last August, some economists see political battles over the ride-sharing market as unnecessarily two-dimensional.

"Some say there’s only room for one dominant company in each international market,” she wrote. "Yet others point out that there’s definitely room for more, given that it’s so easy to start a ride-hailing service: There are no infrastructure costs, few employees, and no reason for customers to get locked in. For riders, who can order rides quickly and easily through a phone app, the more competition the better."

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