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Here’s why Apple’s $1 billion investment in Didi Chuxing is so weird

Daniel Roberts
Senior Writer

When Apple (AAPL) announced recently that it had invested $1 billion in Chinese ride-sharing giant Didi Chuxing, it was seen as a competitive blow to Uber, which is investing heavily in China. It was also a big score for Didi, which was formerly called Didi Kuaidi and was the result of a $6 billion mega-merger last year of Didi Dache and Kuaidi Dache. Didi is bigger in China than Uber is there.

With Apple’s money and other new investments, Didi has shot up the unicorn lists and is now one of the top five highest-valued private tech startups, at $20 billion (expected to rise to $25 billion if and when it closes a rumored $2 billion round), tied with Palantir, and behind only Airbnb, Chinese smartphone maker Xiaomi, and… Uber.

But Apple’s investment was also notable for a reason having nothing to do with Didi or Uber: It represented extremely unusual business behavior by Apple. “Does Apple do this frequently? No, they do not,” says Anand Sanwal, CEO of CB Insights, which tracks venture capital funding and tech unicorns. That’s an understatement—Apple almost never does this.

Apple disclosed just four full acquisitions of private companies so far this year, and no investments other than Didi. Last year, it made 11 acquisitions, and zero minority investments.

Apple hasn't directly invested in any other ride-hailing apps. But Didi has. It invested in San Francisco-based Lyft, Malaysian taxi app Grab (formerly called GrabTaxi), and Olacabs, in Mumbai. Through its investment in Didi, Apple now has a stake in those companies as well, or, to put it more bluntly, by investing in Uber’s biggest competitor in China, it also invested in Uber’s biggest competitor in the U.S. and in India.

Uber CEO Travis Kalanick used the same logic to make a lighthearted joke about the Didi deal on Twitter: "girlfriend owns @apple shares which makes her a didi investor... #Smh #ridesharewars #domesticissues #thanksALotTim."

Apple CEO Tim Cook told Reuters the Didi investment was partially aimed at learning more about China, its second-biggest market. “We are making the investment for a number of strategic reasons,” he said, “including a chance to learn more about certain segments of the China market. Of course, we believe it will deliver a strong return for our invested capital over time as well.” Didi has also scored investments from Alibaba (BABA) and Tencent, and it operates in 400 cities in China, while Uber is in just 50. Didi President Jean Liu said at Re/code’s Code Conference this week that Didi dishes up 14 million rides per day in China, which is four times the entire daily market in the U.S.

Apple is clearly up to something in cars. Morgan Stanley analysts are predicting the Didi investment won’t be Apple’s last, and in a review of Apple’s R&S spending found that from 2013 to 2015, Apple put more money into autos than the top 14 automakers combined: $5 billion vs $192 million. (Tesla, which is not one of the top 14, spent $144 million.)

Meanwhile, a Piper Jaffray note speculated that Apple has interest in building a car: “While it is difficult to determine the full intention of Apple's investment, if the company were to integrate the software elements of an autonomous taxi service with stylishly designed and easy to use hardware in cars, perhaps Apple could replicate the integrated hardware/software model that helped make the iPhone so successful.” Anyone who has seen an iPhone or iWatch line outside of an Apple Store can easily imagine the fervor that an iCar could garner.

Of course, Apple doesn’t have to end up making a car to get into the car business. It could choose to offer its own ride-sharing service. It’s also possible that Apple simply sees a bright financial future for one fast-growing taxi app in China.

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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

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