Last night Apple confirmed that it had invested $1 billion in the Beijing-based ride-hailing company Didi Chuxing.
Wait, what? What does a company that makes smartphones and computers want with a service that makes hailing a taxi easier? Some theories:
1. To learn about China
This was the reason Apple CEO Tim Cook named in an interview with Reuters. “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.”
2. To compensate for slumping iPhone sales
As iPhone sales slump, Apple has begun to double down on services such as Apple Music and mobile payment service Apple Pay (in the second quarter, its services business surpassed iPad and Mac sales for the first time). In China, where smartphone growth has slowed, the government recently blocked Apple’s iBooks and iTunes movie stores. Apple’s CarPlay system links to cars’ built-in display, and Didi gives Apple, which is also reportedly working on a car, another position from which to engage in the world’s largest auto market.
3. To cozy up to the Chinese government
When China shut down iBooks and the movie store, it threatened Apple’s access to a market in which it earns almost a quarter of its iPhone sales revenue. Apple wants to prove that it’s aligned with the country’s businesses. “Apple’s investment in Didi against Uber is a symbolic appeasement,” write’s Quartz’s Asia correspondent, Josh Horowitz, in this excellent explainer of Apple’s political motive. “It’s a bet on the government’s preferred horse, in a competition that ranks alongside Baidu’s fight with Google and Alibaba’s war with Amazon.”