Uber Gets Approval to Merge Its Russian Operations with Yandex

The American company faces strong competition abroad.

byStephen Edelstein| UPDATED Nov 27, 2017 3:47 PM
Uber Gets Approval to Merge Its Russian Operations with Yandex

Uber has received permission to merge its Russian operations with local tech giant Yandex. The merger, announced in July, shows the difficulty Uber is having maintaining its grip on foreign markets.

The merger was approved by Russian antitrust regulators, paving the way for it to be completed in January 2018, according to Bloomberg. The deal creates a new corporate entity that will combine the two companies' ride-hailing services. Yandex will own 59.3 percent of the new entity, Uber will control 36.6 percent, and the rest will be controlled by employees.

Under the deal, Uber won't completely disappear from Russia. Instead, its service will become interchangeable with Yandex's. Riders will be able to use both companies' apps, and drivers will be able to accept ride requests from either service.

As a prerequisite for approving the deal, the Russian Federal Antimonopoly Service required Uber and Yandex to allow drivers to work for other services. The regulator views this as an important way to prevent business from consolidating in the hands of a few large players.

The deal marks Uber's second retreat from a major market, following the 2016 sale of its Chinese operations to Didi Chuxing. In both cases, Uber faced a competitor with deep roots in its local market. In Russia, Yandex already grosses more in bookings on an annualized basis than Uber, and the company's in-house digital mapping division may provide it with a competitive advantage as well.

The main threat to Uber may not be one international rival, but a series of rivals in local markets. In addition to ceding ground to Yandex and Didi Chuxing, Uber faces stiffer competition from Grab in Asia and from Lyft, which is steadily expanding its North American ride-sharing operations. At the same time, Uber faces a seemingly never-ending series of scandals.