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 The tech giant's rare investment gives it a stake in two burgeoning
waves of technology - the sharing economy and car technology - as
the iPhone business that propelled it to record profitability shows
signs of maturing.
Apple is trying to reinvigorate sales in China, where it has come
under greater pressure from regulators, and Cook is traveling to the
country this month.
The move aligns Apple with Uber Technologies Inc's chief rival in
China, as automakers and technology companies forge new alliances
and make cross investments. General Motors <GM.N>, for example,
recently bought autonomous driving technology company Cruise
Automation and has also taken a stake in U.S. ride-sharing company
Lyft.
Cook said in an interview that he saw opportunities for Apple and
Didi Chuxing to collaborate in the future.
"We are making the investment for a number of strategic reasons,
including a chance to learn more about certain segments of the China
market," he said. "Of course, we believe it will deliver a strong
return for our invested capital over time as well."
Didi Chuxing, formerly known as Didi Kuaidi, said in a statement
that this was the single largest investment it has ever received.
The company, which previously raised several billion dollars,
dominates the ride-sharing market in China. The company said it
completes more than 11 million rides a day, with more than 87
percent of the market for private car-hailing in China.
Though Didi Chuxing is valued at upwards of $20 billion, according
to a person familiar with its ongoing funding round, the company has
been losing billions in a costly battle with Uber for market share
in China.
"CONFIDENCE IN CHINA"
Analysts say the deal offers a glimpse of how Apple may diversify
its business as sales of the iPhone level off. Apple has emphasized
its burgeoning revenue from services such as Apple Music and mobile
payment Apple Pay, a strategy that the ride-sharing investment
appears to reinforce, said analyst Patrick Moorhead of Moor Insights
& Strategy.
"After all the hints about the service business and what they would
like to do in the future, it’s all starting to fit together," he
said.
Investors are eagerly watching to see whether Apple will enter the
automotive business. Apple has hired a wide range of automotive
experts, and the company is exploring building a self-driving car,
sources have told Reuters.
Cook said Apple remained focused on the in-car experience with its
CarPlay system, which links smartphones to vehicle infotainment
systems.
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“That is what we do today in the car business, so we will have to see what the
future holds," he said.
Although Apple's sales in China have slumped amid slowing economic growth there,
Cook stressed he remained confident in the market.
"(The deal) reflects our excitement about their growing business ... and also
our continued confidence in the long term in China’s economy," Cook said.
Apple has enjoyed warmer relations with the Chinese government than some
American tech companies, but regulators recently shut down its online book and
film services, triggering concerns among investors. The true value of Apple's
investment in Didi might be in shoring up that relationship, said analyst Ben
Bajarin of Creative Strategies.
"This is as much about sending signals about their seriousness in that country
as it is about helping Didi build a ride-sharing platform," he said.
Didi Chuxing is a poster child for Chinese technology, a critical sector in
Beijing's goal to shift the economy toward higher-value services.
Didi Chuxing executives have met with some of China's top leaders, including
President Xi Jinping last December.
Jean Liu, Didi's president, is the daughter of Liu Chuanzhi, the politically
connected founder of Chinese computer maker Lenovo Group Ltd.
"There's a lot of things we can work on together," she said when asked whether
Didi Chuxing would help Apple's government relations in China.
(Reporting by Julia Love; Additional reporting by Paul Carsten in Beijing and
Beijing Newsroom; Editing by Leslie Adler and Will Waterman)
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