Is merged taxi app firm a monopoly?

China's mobile taxi-hailing app operators Didi Dache and Kuaidi Dache jointly announced their strategic merger via their Sina Weibo accounts on Saturday, also Valentine's Day. [Photo/IC]

After a whole year of fierce competition, Beijing-based Didi Dache and Hangzhou-based Kuaidi Dache, China's two major taxi-hailing apps, announced a merger on Saturday. The new company now has a 90 percent of market share, and analysts say it could be valued at $6 billion. Comments:

It is natural to ask: will the new company become a monopoly? It is still too early to worry about the possibility, because neither Didi nor Kuaidi has a successful profit model, and both were spending money keeping their market share. Actually, the whole taxi-calling app industry is still young and needs further development to truly dominate the market.

163.com, Feb 15

The existing taxi companies and their traditional mode of management will face severe challenges. After the merger, the two Internet taxi giants will enjoy more favorable bargaining power and will further lower their operating costs, thus expanding their market share at the expense of traditional taxis.

Southern Metropolis Daily, Feb 15

Together Didi and Kuaidi occupy over 90 percent of the domestic taxi-hailing app market, but that does not mean they are secure. Nowadays, any technological breakthrough might cause a change overnight. Didi and Kuaidi should continue invest in product innovation, so that customers constantly demand their services.

Fu Weigang, a researcher at SIFL Institute, Feb 15

In an online survey, over 50 percent respondents worry the new company will become a monopoly. That worry is well-founded, because the taxi industry has long been blamed for monopolies, and taxi-hailing apps used to be seen as a catalyst for reform of the industry. The government agency responsible for supervising the market should intervene if a monopoly emerges.

Beijing Times, Feb 15