Why Would Microsoft Invest $100 Million In Uber?

Written by Dana Sanchez

Uber has mushroomed into a $50-billion transportation movement just five years after its inception, and now Microsoft wants a piece of the action, ABCNews reports.

The Wall Street Journal cited people familiar with the matter saying the software company reportedly invested $100 million as part of a massive $1 billion fundraising round Uber recently completed.

This new round of fundraising positions Uber as one of the most valuable private companies ever, according to NewYorkTimes. It’s now in the company of other start­ups like Airbnb, the short-­term lodging service valued at more than $24 billion, and Xiaomi, the Chinese electronics company valued by investors at around $45 billion.

One interpretation is that an investment in Uber is a way for Microsoft to one day have a stake in self-driving car technology. But there are more immediate benefits, said Patrick Moorhead, an analyst at Moor Insights & Strategy, in an ABCNews interview.

“Microsoft’s investment in Uber is important on a few fronts,” Moorhead said. “First is that it gives Microsoft an inside look at one of the most interesting trends — ‘humans as a service….HaaS is hot.”

Then there’s another possible role for Microsoft: its Azure cloud service can power Uber.

“Microsoft needs better entrepreneurial proof points for its Azure cloud services as typically Amazon gets tapped for startups,” Moorhead said.

Uber wants to expand into new markets like China, India and greater Southeast Asia, according to NYTimes. On Thursday, an Uber representative said the company had set aside $1 billion to grow in India, where it faces stiff competition from local taxi services.

One of the most disruptive brands ever, San Francisco-based Uber helped unite the taxi industry and social media, and it’s alive and well in Johannesburg, Cape Town, Durban and Lagos. In South Africa, where unemployment is about 25 percent, Uber is considered a messiah of sorts, bringing affordable fees to transportation and allowing people with cars to become entrepreneurs. And it’s happening in a cashless environment.

“Guys that started with one car now have multiple vehicles,” said Alon Lits, general manager of Uber South Africa, in an AFKInsider video interview. “Now they’re entrepreneurs.”

It’s not the first time Microsoft and Uber have done business together. Last month, Uber acquired part of Microsoft’s Bing mapping unit and absorbed approximately 100 employees. Cortana, Microsoft’s virtual personal assistant also has Uber integration, allowing the voice-controlled sidekick to request an Uber just in time for users to get to a scheduled appointment, ABC reports.

Uber has a history of bringing in important partners during funding rounds, says NYTimes. In March, Times Internet, the digital venture of the Times of India Group media conglomerate, said it had agreed to a strategic investment in Uber. In December, Chinese search giant Baidu invested hundreds of millions in Uber.

Microsoft also has a history investing in companies with which it may want to do business. In 2007, Microsoft paid $240 million for a 1.6-percent stake in Facebook, an investment that led to product integrations between the two companies.

Skype video chat and Microsoft’s Bing search engine have been used to power Facebook software.

“We filed to authorize this new funding more than two months ago,” an Uber representative told ABC News. “The filing is available to the public. We aren’t commenting on additional speculation.”