GoTo Group and Grab are officially merging! This ruling is battering a tsunami of fear that Gojek may be creating monopoly in Indonesia’s ride-hailing and food delivery market. The planned merger would put the two companies in control of 90% of the market. Yet, such domination brings with it serious issues of diminished competition, which ultimately threaten to harm consumers and drivers alike. Though these concerns, early signs point toward the Indonesian government giving their stamp of approval to the merger.
The potential combination of GoTo Group and Grab, creating a regional super-app, would be a landmark deal. Together, the two companies now control Indonesia’s fast-growing ride-hailing and food delivery markets. If passed, this merger would create the biggest player in the industry by far, bringing a multitude of services into one operation. Now, industry experts and consumer advocates alike are sounding the alarm. They worry about what it could mean to have 70 percent of the market controlled by only two entities.
That possible monopoly would bring serious questions about the future of pricing, service quality, and innovation in our nation’s core infrastructure sector. Critics claim that without increased competition, consumers would be left with higher prices and reduced service alternatives. Furthermore, there are worries about how this merger might affect the thousands of drivers who depend on these services for their livelihoods.
To counter these demands, drivers from the two companies GoTo Group and Grab have staged national drivers’ strikes across the country. Yes, they have gone on strike demanding to end bad treatment, an increase in pay, more favorable working conditions and harsher protections against mistreatment. The protests highlight how workers of the gig economy are still struggling in Indonesia. They call for fair and just treatment even as corporate mergers and consolidations increase.
The Indonesian government has yet to make an official public announcement regarding the merger. Analysts say that political considerations may still turn the tide against its approval. Government will need to consider the economic advantages of creating a new, more robust market competitor. With one hand, they’ll need to address the increasing level of social unrest from aggrieved drivers.
As the circumstances change, major stakeholders from all parts of the industry are watching closely. The fate of this merger could determine the future of Indonesia’s ride-hailing and food delivery markets for years to come.