SUPER-APP BATTLE: GR AB VS. GO-JEK
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FORTUNE.COM // APR.1.18
For the tech giants who run them, China’s super-
apps are a data El Dorado. Unlike in the U.S., where
Google, Facebook, Amazon, and other tech leaders
wrangle and squabble over disparate streams of data
reflecting different aspects of consumer behavior,
Alibaba and Tencent hoover up information across the
spectrum, generating 360-degree profiles of hundreds
of millions of users. Such data raises weighty privacy
concerns—but for now it remains an asset that com-
panies can monetize in relationships with advertisers
and vendors, and through new products of their own.
In emulating China’s apps, Grab and Go-Jek faced
an added hurdle: the limited reach of Southeast Asia’s
banks. In China, more than 80% of adults have ac-
cess to a bank account. Malaysia and Thailand have
similar rates. But in Indonesia, the figure is only about
50%, while in the Philippines and Vietnam, it falls
below 35%. Those disparities reflect wide variation in
economic development, as well as fragmented infra-
structure and far-flung geography. (Indonesia alone
encompasses 17,000 islands.)
How to create a super-app for millions of consum-
ers who have never even seen a credit card? Go-Jek
and Grab have used the Internet and smartphones
ingeniously to create armies of mobile tellers. Car and
motorbike drivers collect cash and credit it to custom-
ers’ digital wallets. They toil alongside neighborhood
agents who, in addition to topping up the wallets, help
consumers who lack bank accounts purchase goods
online, pay bills, buy insurance, or apply for loans.
Go-Jek and Grab are dueling for customers in
arenas ranging from grocery delivery to medical advice
(see sidebar). But the race in financial services has
sparked a particularly frenzied burst of dealmaking.
Go-Jek tends to prefer partnering through acquisitions,
which allows tighter control. In Indonesia, for example,
it bolstered its payments dominance in 2018 by acquir-
ing three major financial services companies—an
offline payments processor that works with retailers, a
payment company that serves online merchants, and
a saving and lending network that helps rural and
working-class families buy household appliances—and
merging the three into its Go-Pay system.
Grab prefers partnerships and joint ventures, which
enable it to reach more markets faster—and have
helped Grab get an edge outside Indonesia. In Octo-
ber, Grab announced a partnership with Mastercard
to issue prepaid cards that Grab customers can spend
with any merchant that accepts Mastercard. Grab also
has paired up with Japan’s Credit Saison to found Grab
Financial Services, which now offers loans to unbanked
customers—combining Grab’s data on consumer be-
havior with Credit Saison’s expertise in credit analysis.
Grab suffered a setback in Indonesia last year when
that country’s regulators barred ventures with more
than 49% foreign ownership from offering digital
wallets. But Grab worked around that restriction by
acquiring Kudo, an Indonesian payment startup, and
partnering with Ovo, a financial services firm owned by
Indonesian conglomerate Lippo Group. Lippo’s shop-
ping mall holdings give Ovo’s smartphone payment sys-
tem an advantage at shopping centers and restaurant
chains. Ovo’s users are also relatively affluent—allowing
Grab to reach beyond the “base of the pyramid” that
Makarim and the Tans studied at Harvard.E
VEN AS GRAB AND GO-JEK expand elsewhere,
their original battle over transport rages—in
ways that hint at the perils of rapid growth.
In Singapore, Grab’s acquisition of Uber
sparked outrage from drivers, who com-
plained that the combined companies re-
voked their incentive, and passengers, who protested
higher prices and poorer service. (Grab has begun
addressing rider complaints, including by eliminating
fees for trips canceled within five minutes of booking.)
The rivals are also weathering more scrutiny from
regulators. Singapore’s competition watchdog im-
posed fines of $9.5 million on Grab and Uber, ruling
that their deal had eroded competition and driven
fares up by as much as 15%. The regulator ordered
Grab to restore its premerger pricing and told the
service to remove exclusivity obligations on drivers
and taxi fleets. This would seem to create opportuni-
ties for Go-Jek, which has committed $500 million
to expanding in Singapore and other markets. But
Go-Jek’s efforts to establish subsidiaries abroad have
also met resistance. In the Philippines, for example,
regulators have refused to license one Go-Jek business,
citing restrictions on foreign ownership.
Sometimes the upheaval in the industry manifests
itself as actual unrest. In October a swarm of angry
motorcycle drivers converged on the Lippo Build-
ing in downtown Jakarta. Protesters demanded the
chance to present a minimum wage proposal to
executives from Grab, whose local headquarters are in
the building. Denied an audience, the crowd turned
violent, smashing the windows of the front lobby, and
police cleared the scene with tear gas.
The scrum in Jakarta echoes the volatility of the
markets in which Grab and Go-Jek compete—places
where rapid growth and the rising expectations of
workers and consumers combine to keep conditions at
a rapid boil. The turmoil could conclude in a mega-
merger in which one of the green-jacketed giants
gobbles up the other. But many investors say they now
see Southeast Asia’s super-app arena as a marketplace
in which well-capitalized firms will settle into a long-
term competitive standoff, alongside their myriad local
partners. “The conventional view used to be that this
is a winner-take-all market,” says David Katz of KKR,
one of Go-Jek’s backers. “But no one thinks that now.”
The race, in other words, has many laps to go.