Competition for Swiggy intensifies with Zomato acquiring UberEats

Zomato, recognized as one of the largest food apps in India, has acquired Uber’s food delivery business in India in an all-stock transaction, which gives Uber 9.99% ownership in Zomato. This move by the ride-hailing giant to sell Uber Eats in India to rival Zomato is part of its recent efforts to exit money-losing businesses.

Uber Eats in India will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective today.

It is expected that with the acquisition going through, the combined entity of Zomato and Uber Eats India is expected to garner 50-55% market share in terms of the number and value of orders, thus, making it even more tough for the rival food App player, Swiggy.

Zomato's CEO, Deepinder Goyal, asserted that the company is proud to have pioneered the restaurant space and to have created a leading food delivery business across more than 500 cities in India. "This acquisition significantly strengthens our position in the category," said Goyal.

Commenting on selling the business to Zomato, Dara Khosrowshahi, CEO of Uber, said,  “Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication. India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader. We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success.”

According to the New York Times, Uber apparently has faced increased pressure from investors to turn a profit, and it spent much of 2019 cutting costs and laying off employees after a disappointing initial public offering last May. While its food delivery service, Uber Eats, has grown quickly, it faces aggressive competition around the world, and the company has been forced to spend heavily on subsidies and promotional offers to gain new users.  With the selling of Uber Eats in India to Zomato, Uber can cut losses while taking a stake in a start-up that was valued at $3.55 billion this month.