Taxi drivers in Turkey have stopped using Dubai-based ride-hailing service Careem after the company was acquired by its regional rival, Uber. Traditional yellow cab drivers have been opposed to Uber for more than a year, a conflict that has from time to time led to violence.
The reaction by the taxi drivers came after ride-hailing service Uber announced Tuesday it has acquired its Middle East competitor, Careem for $3.1 billion - giving the San Francisco-based firm the commanding edge in a region with a large, young, tech-savvy population. The deal comes as Uber's losses grew last year ahead of plans for an initial public offering (IPO) this spring. Uber said the purchase consists of $1.7 billion in convertible notes and $1.4 billion in cash. It marks the largest technology transaction in the Middle East outside of Israel and propels the Dubai-based firm to legendary status in the region's budding tech startup scene.
An estimated 17,400 official yellow taxis operate in Turkey's most populous city, Istanbul. They are a pillar of the city's often patchy transport system, but critics say that poor quality of service and overcharging have given Uber an opportunity to carve a niche in the market. After its silent and unnoticed foray into the Turkish market in 2014, Uber found itself increasingly the target of taxi drivers in Istanbul, the only Turkish city where it is available. Uber's operations in Turkey have sparked a lot of controversies, with taxi drivers protesting against what they said was unfair competition and illegal business practices by the ride-sharing service. Taxi associations in the city filed a lawsuit against the popular app, calling to block access to the app and seeking damages to their business.
"We were shocked," said Hüseyin Duman of the United Taxi Drivers Association, speaking about the deal between Uber and Careem.
Around 1,500 taxi members of the United Taxi Drivers Association have been using Careem. However, after the deal was announced, taxi drivers stopped using the app.
Duman told the Turkish language daily, Hürriyet that they will be issuing a press release in a few days and that they will end their relationship with Careem.
"We have come to the end of our relationship with Careem. There are approximately 1,500 taxis in Istanbul using Careem. This a move by Uber to enter the Middle Eastern market. Uber has acquired Careem because of its dominance in the region," said Duman. He also claimed that taxi drivers in Morocco and Palestine have protested the merger, but predicted that Uber would soon be permanently gone from the Turkish market.
In a statement after the deal was announced, Careem said it will keep its brand and app unchanged and will operate as a wholly owned subsidiary of Uber led by its own original founders.
The deal is expected to close in the first quarter of 2020 and is subject to regulatory approval in several countries.