Word of a potential Grab-gojek merger has commanded attention all over Southeast Asia. While such a merger could bring a myriad of opportunities in fintech and the digital space, a unification of the two Southeast Asian tech stars also raised fears of a monopoly in the ride-hailing, food delivery and payments industry.
The proposed marriage between the two has also stirred dissent amongst drivers all over Indonesia, with motorbike driver unions threatening to spark nationwide protests in a wager to protect their livelihoods.
However, talks of a merger between Grab and gojek have reached an impasse with management failing to reach a consensus on firm ownership. Instead, gojek has begun on another trajectory, as they advance on merger talks with one of Indonesia’s top e-commerce firms Tokopedia.
How then will a successful gojek-Tokopedia merger impact the Southeast Asian e-commerce space, particularly in Indonesia? And in what ways would the consequences of such a merger differ from that of a Grab-gojek marriage?
Indonesian-based gojek and Tokopedia combined would amass a valuation of at least US$18 billion. With an active user base of 29 million and 100 million respectively, both gojek and Tokopedia would be able to tap on the other’s user network, appealing to an already loyal customer base.
As both entities possess strongholds in the Indonesian market, a merger would propel the firm to dominate Indonesia, Southeast Asia’s largest and fastest-growing internet economy, vying with contenders Grab, Sea Group’s Shopee and Lazada.
Also Read: Grab-gojek or Tokopedia-gojek: which merger will make better business sense?
Previously, the possibility of a Grab-gojek merger raised apprehension of a potential decline in competition in the ride-sharing and food delivery scene in Southeast Asia, areas where both brands have emerged as market leaders.
On the other hand, a gojek-Tokopedia union would likely proceed more amicably with less backlash from the masses as the anti-competitive effects in any one vertical would be less profound. Furthermore, there is a lower tendency for anti-competitive laws to be flouted in a gojek-Tokopedia merger in contrast to Grab-gojek, thus reducing the possibility of objections from authorities.
Additionally, a join of hands between gojek and Tokopedia could raise red flags for Grab who is trying to establish its presence in Indonesia. Both Grab and Gojek have been investing heavily in their payments arm, shifting the focus of the business from ride-hailing to digital banking.
In December 2020, Gojek poured US160 million into Indonesian bank PT Bank Jago, signalling its intent to strengthen its financial services sector with GoPay at its forefront. Given that Indonesia comes in fourth for the largest unbanked population, it is no surprise that Grab is also eyeing a piece of the pie.
Yet, as merger talks fall through, Grab may have lost out on a golden opportunity to bolster its presence in Indonesia and more so, with a strengthened Gojek.
Nonetheless, it is unlikely that Grab will sit back. A gojek-Tokopedia merger may spur an alliance between Grab-backed digital wallet OVO and Ant-backed Dana, as rumoured in June last year. This could signal a heated competition between gojek’s GoPay and a Grab-backed Ovo-Dana in an attempt to capture a greater share of the Indonesian e-wallet market, where digital payments are trending. However, Grab would need to take quick action to compete with gojek’s GoPay, who is already a preferred digital wallet amongst locals.
Also Read: Ecosystem Roundup: Tokopedia, gojek on the verge of a US$18B merger; GoBear ceases ops
We should not forget that tech companies such as gojek, Tokopedia and Grab operate in digital markets where network effects are accentuated as opposed to conventional markets. It would be nearly impossible to overthrow market leaders in these fields, with high switching costs and information asymmetries that give the incumbent a competitive edge.
With the right leadership and a smooth collaboration between the two entities, the merged firm carries great potential to rise to the title of Indonesian internet powerhouse. If Grab fails to keep up, a strong defence from gojek-Tokopedia may deny Grab from successfully setting up a base in Indonesia.
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