Microsoft to invest Rs 600 crore in ride-hailing service Ola

In a bid to grab larger presence in India, Microsoft Corporation is all set to invest around $100 million in ANI Technologies, which owns ride-hailing service Ola.

This is in line with Microsoft CEO Satya Nadella vision to push Microsoft's product Azure cloud platform from Amazon Web Services (AWS) in India. Talks are in initial stage and term sheet of the investment is yet to be finalised, said people familiar with the development reported LiveMint.

Earlier in February, the company has invested $200 million in a cloud service deal with Flipkart.

Whereas Ola too is looking forward towards fund to counter its rival Uber, which has presence in 70 countries and considered most-deep pocketed start-up, in Indian market. Till date, the Indian ride-hailing app has raised Rs 2,345 crore from investors like Softbank, Tiger Global and others. Uber, after retreating from China and Russia, is also betting big on India.

In fact, there is intense fight between Ola and Uber over who controls how much of the market. Uber claims it is bigger than Ola but executives and investors at Ola claim that Uber is less than half of Ola’s size. Both keep throwing superior statics in compare to each other.

Ola reported a seven-fold jump in revenue to Rs 758.23 crore in the year ended 31 March 2016, but losses nearly tripled to Rs 2,313.7 crore because of heavy discounts to customers and spending on incentives to its drivers.

This month, Ola was in news for wrong reason, as a 29-year-old doctor in Delhi was kidnapped by an Ola driver and his accomplices on 6 July and held captive for nearly 14 days before the police found the victim. This seems to serve as jolt for company reputation. Earlier, Uber too hogged limelight for wrong reason when its driver raped a woman in December 2014 and was dragged to court.

At present, in compare to Uber’s four ride segments UberPOOL for ride-sharing and UberGo, UberX and UberXL for private taxis, Ola offers nine segments including Share (ride-sharing), Micro, Mini, Prime, Lux, Auto (three wheeler auto-rickshaws), Rentals, Outstation, and TaxiForSure.

Ola is present in more than 100 cities compared to Uber’s 29. Car ownership in India is less than 20 for every thousand people, compared to 128 for China and nearly 800 for America.

Given affordable pricing and the network effects provided by connectivity, India has the propensity to become a game changing market.