As a giant, Grab must act responsibly

WITH great power comes great responsibility. This quote from the Spider-Man comics thoroughly applies to Grab right now. On Monday, the Singapore-based ridehailing app turned consumer platform said that it would acquire the South-east Asian business of San Francisco-based rival Uber, taking over the latter's transport and food delivery operations. In turn, Uber will get a 27.5 per cent stake in Grab.

If the merger materialises, the enlarged Grab will become a true titan in the region, offering services that permeate almost every walk of life: transport, food delivery, courier, e-payments and even financial services.

Take transport. Grab's bumping off of a global player with much greater scale and deeper pockets is a feat unmatched by any other Singapore startup. But it has also been criticised for its potential monopolistic behaviour to the detriment of consumers and innovation. While Grab would disagree, this sentiment is understandable, given the startup's market share and current unprofitability.

The thinking: Before the merger, Grab and Uber competed for users by dishing out discounts and incentives like there was no tomorrow. For five years, riders and drivers in Singapore benefited from an extravagant, venture capital-backed war between the two. With Uber out of the picture, Grab will become Singapore's one and only third-party ridehailing platform. Imaginably, Grab will be less incentivised to offer discounted rides to riders or monetary incentives to drivers to compete for users and market share, or to rapidly roll out new, innovative features to maintain a user interface and experience superior to Uber's.

To boot, Grab investors - now more eager to see returns on investment - will likely pressure the startup to exploit its market position and start making money.

This means higher fares, and even fewer discounts and incentives - all of which will not be fair to riders and drivers, who now have limited or no options.

In fact, Grab affirmed that the Grab-Uber merger will pave a way to profitability: "In transport, we're actively executing our multimodal vision, adding bicycles (GrabCycle) and preparing other new integrations that will put all transport choices on just one platform. With this acquisition, our platform is the leader in cost efficiency, and we now have a path to profitability in the transport vertical."

To be fair, Grab also highlighted that the efficiencies will directly benefit riders and drivers. It said: "Ultimately, ridehailing is about network effects. The more drivers, the more rides they can complete, the more users we can accommodate. The more users, the more rides and income opportunities there are for drivers. It's good problem to have."

Food delivery is another area in which Grab is doubling down. Co-founder Tan Hooi Ling noted that the company will "rapidly and efficiently" expand GrabFood, Grab's delivery platform. It will integrate uberEATS (Uber's food delivery platform) into GrabFood and roll out GrabFood across all major Asean countries in the first half of 2018.

Acquiring uberEATS was a shrewd move by Grab, which up till the merger, operated GrabFood in only two countries, Indonesia and Thailand. It allowed Grab to score an easy entry into the competitive food delivery sector in Singapore and gave Grab immediate access to some 2,500 restaurant partners here, which uberEATS took over two years to amass.

Faster deliveries

Grab said: "Our combined delivery fleets, together with Grab's sophisticated demand matching technology, will reduce waiting and delivery times. With the new GrabFood app, we strive to become one of South-east Asia's largest and most popular food delivery services, offering an expansive geographic reach and quality range to suit every palate and wallet."

Ms Tan added: "GrabFood will also be another great use case to drive the continued adoption of GrabPay mobile wallet and support our growing financial services platform."

GrabPay, which Grab introduced in 2016 to allow riders to make in-app payments for their rides, was recently extended to merchants, so that consumers can also make payments for their purchases in restaurants and shops, through the Grab app. To date, Grab has partnered over 1,000 merchants in Singapore.

For growth, Grab is next banking on financial services. Earlier this month, Grab unveiled Grab Financial, a platform that allows Grab to offer financial services such as micro-lending, vehicle financing and insurance to consumers in South-east Asia. Grab Financial has been hailed for its ability to disrupt the banking sector.

Grab said: "With the immediate expansion of services like GrabFood, we are in turn expanding the adoption of our mobile wallet, which in turn supports our Grab Financial."

One thing is clear. From running all these services, Grab will come into possession a colossal trove of consumer data, which it will no doubt analyse to try and better serve its customers, but more importantly, which it must safeguard.

Any compromise of data can lead to direct financial losses such as lost sales or monetary judgments. It can also cause indirect losses such as a fall in investor confidence or customers fleeing to competitors, of which there could be none in Singapore, hence rendering data protection an even greater responsibility for Grab.

Extreme outcomes

All said, what will Grab do with its new powers? Only time will tell; but there are two extreme possibilities. First, Grab remains a startup at heart, constantly challenging the status quo, moving fast and focusing on changing the world. Second, Grab morphs into a cold, complacent large corporation driven by numbers, answering more to shareholders and less to customers, and getting disrupted by the next Grab.

The startup seems determined to make the first scenario happen. It said: "Grab is committed to our mission of out-serving our customers and improving the lives of our partners across South-east Asia.

"We believe combining Uber's and Grab's operations will improve efficiencies and synergies in Grab's network, and bring about better service to our customers."

As a company that has won the hearts of consumers and the trust of investors both within and beyond South-east Asia, Grab should stand by its promises and behave responsibly and benevolently, even if it's a giant.