Google has invested for the first time in a ride-hailing business in Asia after announcing that it invested in Go-Jek, as the startup in Indonesia and its rivals with deep pockets rapidly expand their services as well as digital payments across Southeast Asia.
The investment by Google deepens its commitment to the internet economy of Indonesia, said the Caesar Sengupta a Google vice president on Monday.
The announcement by Google comes only two weeks after reliable sources said that Google and Temasek, the state investor from Singapore were amongst those that would invest in Go-Jek as part of its fundraising round of $1.2 billion.
Rivals Uber and Grab are supported by the SoftBank Group of Japan, while Go-Jek secured investments from Tencent Holdings and JD.com two technology giants based in China.
Google’s blog contained no specifics over the amount of money that Google would be investing with the startup, but a pair of sources, with information close to the situation, said that Google would invest approximately $100 million.
Ride hailing companies having been investing millions of dollars in order to expand digital payment systems and seek to allow users to pay for services of third parties.
With over 133 million people using internet, Indonesia is home of the fifth largest population of users of internet in the world, but just half of the population of the country is connected to internet, said Sengupta.
Both Uber and Grab are expanding across the home market of Go-Jek, which is the most populous country in Southeast Asia and where locals use a myriad of services that are mobile-based. Southeast Asia is the third largest ride-hailing market in the world trailing just China and the U.S.
Go-Jek delivers things from groceries to meals to cleaners, hairdressers and masseuses across the capital city of Indonesia Jakarta, all using just a smartphone app.
The company, which started as a motorcycle taxis raid-hailing app, was established by Nadiem Makarim, a Harvard School of Business graduate and former associate of McKinsey, who has become a start-up success poster child for Indonesia.
The use of ride-hailing services is growing rapidly across the globe as more and more people in large metropolitan areas opt to use the ride-hailing service rather than public transportation, normal taxis or their own vehicles believing ride-hailing to be a less expensive.