Ola and Uber Set for Global Face-Off

Ride-hailing service Ola arrives in London

During the past few years, the ride-hailing business in India has expanded rather slowly compared with many other markets, growing at a single-digit rate. This has prompted Ola, the country’s largest ride-hailing service, to explore global opportunities for growth.

This week, Ola launched its service in London, taking on the current market leader Uber in the city. Simon Smith, head of Ola’s international business said that the development is “the next step in our ambitions to connect people in cities throughout the UK”.

Uber has been operating for several years in London, but is fighting a ban by the local regulator Transport for London, which decided not to renew the company’s licence citing a “pattern of failures” that put the safety of its passengers at risk. For now, Uber continues to run in the city while it appeals the decision.

Ola has expanded rapidly throughout the UK since its launch in 2018 and now operates across 28 local authorities (see India’s Ola Announces UK Push). According to the company, it has seen more than double-digit growth rates in the number of rides in the last quarter in Birmingham, Coventry and Warwick. Ola says that to date it has provided more than 3 million rides, with more than 11,000 drivers already operating on the platform.

Ola claims it’s raising the standards of safety in the UK ride-hailing industry by bringing global best practice to the market. It offers a novel safety feature that means a driver can start a trip only after a passenger provides them with a unique four-digit code. The company is also implementing an artificial intelligence-powered system called Guardian, which picks up on deviations in route patterns and enables Ola to check with the driver or customer that nothing “untoward” is happening. The app also has a panic button that users can push if anything goes wrong. Ola has teamed up with DriveTech (part of the AA), consulting giant Mercer and education company Pearson to ensure that Ola passengers in London benefit from the highest standard of driving skills, and driver customer service and communication.

To celebrate Ola’s launch in London, passengers who sign up in the first week will be given up to £15 in ride vouchers. And to incentivize its 25,000 drivers in the capital, the company won’t take any commission from them for the first six weeks. After that, it will grab an 18% cut of all rides, which compares with Uber’s 25%.

London’s ride-hailing market is getting competitive, with Estonia’s Bolt and France’s Kapten also looking to chip away at Uber’s dominance. London’s iconic black cabs are also feeling the threat as the ride-hailing players often charge much lower fares. But for Ola, expansion into the UK city, one of the world’s most lucrative markets, is a major step in being perceived as a global company. In addition to India, Ola is already available in Australia and New Zealand and operational in more than 250 cities. Ola is becoming a global brand.

A strange aspect of this move is that SoftBank, through its Vision Fund, is a major investor in Uber and Ola. The Japanese giant has been coming under a lot of pressure from its investors recently over falling valuations, closures of companies it has invested in, and its high-octane investment approach. At present, SoftBank appears to be taking the view that the market in London is big enough to accommodate both Ola and Uber. It also seems to believe that, should Uber lose its licence, it’s better to have Ola there than to miss out of the London market. However, if Uber continues running and the competition becomes too destructive or expensive, SoftBank’s investors may start to clamour for it to step in.