While many speculate about whether a Grab & GoJek merger could happen and the many synergistic benefits a merged Grab-GoJek would enjoy, we actually believe that the two companies should never merge. Why? Because existing as a duopoly prevents the two from being targeted by regulators and people forget that:
1. Grab & GoJek’s main competition is not each other but rather the traditional economy. There’s no need to acquire each other, most of their growth will come from taking share from the traditional economy.
For example, while the number of ride-hailing users in Southeast Asia soared from 8 million active users in 2015 to 40 million in 2019, these consumers represented 6% of the region’s population, according to a recent report from Google, Bain & Company, and Temasek. Grab and GoJek can both enjoy many multiples of revenue growth simply by converting more people to ride-hailing instead of trying to acquire each other’s existing customers.
2. A duopoly is actually stronger than a monopoly in the long term. Having a major competitor helps prevent regulators from restricting their growth and business expansion.We believe that both companies have better long-term prospects as a duopoly over Southeast Asia. Anti-trust regulation is their main threat as they become superapps, not each other.