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On the SEA Superapp merry go-round

Lately, the tech ecosystem in Southeast Asia has been rife with news discussing a potential merger, first between Grab and Gojek, and then, between Gojek and Tokopedia. 

Almost all news publications and blogs have covered the developments, predicting who is going to merge, which merger makes most sense, and what motivations are driving the decisions. The coverage is all for good reason.

Either of these two potential deals going through would create a behemoth with the potential to change the landscape of Southeast Asia.

Grab, Gojek and Tokopedia are all part of the coveted Southeast Asia unicorn club. Their combined backers include – Google, Softbank, Didi, KKR, Warburg Pincus, GIC, Sequoia and Alibaba.

Grab is arguably the most recognized name in the ecosystem, and also the highest valued at US$14 billion. Starting off as ‘GrabTaxi’, the company was a ride-hailing competitor to Uber in the region, before eventually winning the race via an acquisition in 2018. After becoming the clear winner, the company then moved into other high-growth verticals such as food delivery and payments. 

Gojek has had a similar incredible journey – starting off in 2009 in Indonesia as a call centre to connect consumers to courier delivery and two-wheeled ride-hailing services, to now becoming a full-fledged super app providing more than 20 services valued at over US$10 billion.

Unlike the other two, Tokopedia is primarily an e-commerce company, and the largest one in Indonesia.  Its online marketplace allows individuals and small to medium size businesses to open as well as maintain their own online store easily, while providing better and safe online shopping experiences for customers. 

There have been ongoing rumours about a potential Grab – Gojek rumour for a while now, but talks intensified when Grab CEO Anthony Tan announced to employees that the company was in a position to make acquisitions, right in the thick of talks with Gojek. 

The ride hailing market was seen as a race to the bottom – with aggressive marketing and price wars to out compete. 

This impacted cash burn, and investors, most notably Softbank (an investor in both), was touted to be pushing them towards a consolidation of market position, creating a behemoth which could then finally focus on profitability. 

However, the initial excitement seemed to have died down, primarily due to a couple of speculated reasons. 

First, was a discussion of control – Gojek indicated it was seeking a 40% share in the combined entity, which Grab believed to be too much. Second, there was indecision as to who would run the combined entity, with Tan vying for the role of CEO. 

More importantly though, these merger talks sparked debate of possible anti-trust concerns, given the sheer power of the combined entity, coming at a time when the world is debating the power that ‘Big Tech’ holds. 

Shortly post the Grab-Gojek talks, the start-up ecosystem was abuzz with news of a potential merger between Gojek and Tokopedia, with the potential to create a US$18 billion entity with future IPO ambitions in the US and Indonesia. 

Unlike Grab-Gojek, this was met with less concern about anti-trust issuesw; instead, observers commenting that this could pave the way to create an all-in-one digital powerhouse in Indonesia with numerous possibilities for example, Gojek’s delivery fleet could serve Tokopedia’s online shopping orders, they could combine their respective payment wallets to consolidate into one major player, with job losses being less likely given the lower overlap of verticals. 

The conclusion? 

While it is hard to predict which way this super-app merry go round will end, one thing is clear – that either of these going through will be a landmark deal for Southeast Asia, impacting SMEs, consumers, and the competitive landscape alike.