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Uber Technologies is reportedly investing $500m in developing an alternative to Google Maps as its operation in China agrees to merge with rival Didi Chuxing.
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The mapping project is aimed at securing the online transport company’s independence from Google Maps in the short term and is linked to long-term plans to develop its own self-driving cars.
The mapping project appears to have started after Uber’s failed $3bn bid in 2015 to acquire Nokia’s Here Maps division, which was sold to a consortium of car makers in Europe, reports Neowin.net.
Uber and its driver-hailing app are heavily dependent on Google Maps, which has recently put up prices for companies to use, raising concerns about further increases, reports the Financial Times.
The project is also aimed at enabling users to specify pick-up and drop-off points with greater precision, especially in countries where Google Maps are less accurate than in the US.
Uber has already started collecting images for maps in the US and Mexico, and has assembled a strong technical team that includes the former head of Google Maps, Brian McClendon.
In July 2016, satellite imaging company DigitalGlobe announced a multi-year, global partnership with Uber to supply high resolution satellite imagery.
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In a recent blog post, McClendon said accurate maps are at the heart of Uber’s service and the backbone of its business.
“The on-going need for maps tailored to the Uber experience is why we’re doubling down on our investment in mapping,” he wrote.
According to McClendon, the imaging project already under way in the US and Mexico is set to extend to other countries soon, and is focused on identifying the best routes and pick-up and drop-off points.
“I remain excited by the prospect of how maps can put the world at our fingertips, improve everyday life, impact billions of people and enable innovations we can’t even imagine today,” he wrote.
Uber looks to merge operations with rival
Uber is also reportedly planning to merge its operations in China with local rival Didi Chuxing, neither of which has been able to achieve profitability.
“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there,” said Uber CEO Travis Kalanick in a blog post.
“Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term. I have no doubt that Uber China and Didi Chuxing will be stronger together,” he wrote.
While the complete details of the transaction are yet to be officially announced, it is speculated that the deal will create a company worth about $35bn.
According to unnamed sources cited by Bloomberg, the two ride-hailing technology companies will merge such that Uber China will hold 20% in the combined company, while Didi Chuxing is expected to invest $1bn in Uber, which is currently valued at $68bn.
The sources said Uber had lost more than $2bn in China. Neither company responded to requests for comment, according to Bloomberg.
Analysts said investors have been pushing for Uber to cut is losses in China, and that the move to shed its loss-making operation there could pave the way to an initial public offering (IPO) for Uber.