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German media giant Axel Springer announces investment into Uber

Xinhua Financein BERLIN
2017-04-19 21:38

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German media company Axel Springer, one of the largest digital publishing houses in Europe, has announced its investment into the U.S.-based car-hailing company Uber.

But the amount of the financial investment remains so far undisclosed.

Kai Diekman, formerly chief editor of Springer's flagship publication BILD, Germany's largest-circulation newspaper, will act as advisor for the Silicon Valley startup with his focus on political issues.

Diekman is not only familiar with the political landscape in Germany, but has also gained insights into Silicon Valley culture during a sabbatical in California in 2012.

This investment is not the first foray of Springer into the so-called "sharing economy". In 2012 the company agreed on a strategic marketing partnership with Airbnb, an online marketplace and hospitality service, in addition to a minor investment.

Uber has been touted as a success story of the so-called sharing economy, where individuals are able to borrow or rent assets owned by someone else, typically via the Internet.

To riders, Uber is essentially synonymous with a cheaper type of taxi. To drivers, it acts as a referral service. Uber's app connects riders with drivers via their phone's GPS capabilities.

Uber also processes all payments involved, charging the rider's credit card, taking a cut, and direct depositing the remaining money into the driver's account.

Springer's investment is a rare piece of good news for Uber, a company whose recent headlines have been dominated by legal uncertainty, criticism over its business ethics and concerns over sexual harassment and discrimination.

In February 2017, the hashtag #DeleteUber began trending on social media. One month later Uber co-founder and CEO Travis Kalanick admitted that he needed "leadership help" and announced on Tuesday that he is looking for a chief operating officer.

Advocates of Uber point to the convenience and prize-advantage for consumers, and the possibility for workers to use their time more flexibly. A 2016 study by researchers at Arizona State University furthermore suggests that ride-sharing services such as Uber decrease traffic congestion in cities.

During its rapid expansion, since it launched in 2009, the Californian startup has encountered numerous legal roadblocks as traditional taxi services fight to protect their turf. Uber continues to face legal challenges in many European countries, including Germany, Italy, Spain, Belgium and the Netherlands.

In 2016 Uber sold its Uber China unit to Didi Chuxing, its former rival in Chinese market, for a 17.5 percent stake in the Chinese ride-hailing giant backed by internet giants Alibaba and Tencent. Over the past several years, Uber has lost a fortune in an unsuccessful attempt to compete with Didi Chuxing.

Despite its uncertain future, at over 65 billion U.S. dollars, Uber is now potentially worth more than the stock market capitalizations of automakers BMW, GM and Honda.

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