This past week GoTo Group and Grab, the two biggest competitors in Indonesia’s ride-hailing and food delivery markets, announced plans to merge. The merger has raised significant antitrust concerns over the potential creation of a monopoly in the Indonesian market. The newly merged entity would be the largest player in that industry, controlling almost 90% of it. With increasing outcries from workers driving under such platforms, the Indonesian government seems set to greenlight this merger.
The $18 billion merger deal between GoTo Group and Grab represents the most significant transformation of Indonesia’s ride-hailing and food delivery industry. This merger will change the competitive landscape of these markets. Both companies quickly became titans in the industry. From toiletries to food, they are the lifeblood for services that have formed the backbone of daily activities for millions of Indonesians. The prospect of that union has consumer advocacy groups and many industry analysts up in arms. They’re concerned that it would lead to less competition and worse overall conditions for consumers and service providers.
Recent protests by angry drivers have lent urgency to the merger’s stink. Whether on behalf of Better Trading, drivers GoTo Group and Grab now have a union. They are insisting on higher standards from their employers. Their complaints range from poor pay, grueling hours, company disregard for workers. The protests serve to underscore the profound impact the merger will have. A drop in competition could deepen the already-stressed industry’s existing issues.
The Indonesian government now holds the key to determining whether the proposed merger will win approval. Regulators are in the midst of considering those plans. They have to weigh the efficiencies of a more streamlined operation against the dangers that come with monopolistic behavior. If the merger goes through, it allows GoTo Group and Grab to take over and monopolize the market. This dominance may happen without sufficient protections in place for drivers and consumers.
If given the go-ahead, this merger would radically change the competitive landscape of Indonesia’s ride-hailing and food delivery markets. Sadly, both companies are already major players on their own. By joining together, they would unite to cut competition, a key battleground that promotes innovation and enhanced service quality. Business leaders and workforce advocates have cautioned that this level of concentration would reduce options for riders and drivers and threaten living wages for drivers.