Gojek vs. Grab: A Two-Person Zero-Sum-Game
In 2010, the Indonesian startup Gojek pioneered the ride-hailing landscape in Indonesia, with Grab closely following in its footsteps in 2012. Both companies have since expanded their operations across Southeast-Asia and beyond ride-hailing, intensely competing in a cash burn battle for the leading super-app status in the region. As super apps, they have diversified their services to include food-delivery, parcel delivery, lifestyle services (such as massages, repairs, cleaning services), and more. In their endeavors to earn this title, the two companies have employed similar aggressive strategies to appeal to their customers (such as vouchers, discounts, and promotions), as well as to appeal to their drivers (such as insurance packages, data plans, etc.).
Most recently, in the battle to establish customer and driver loyalty over their rival, both companies have successfully turned to financial technology; Gojek established ‘GoPay,’ their in-app fin-tech product which allows users to make seamless cashless transactions on their platform and with thousands of merchant partners (restaurants, stores, etc.) and Grab similarly established ‘GrabPay.’ At the moment, Gojek and Grab have yet to become profitable companies, yet they continue to intensely burn through their cash for user and driver incentives in order to ‘win’ over each others’ user and employees. At this point in time, cooperation between Gojek and Grab seems improbable in the near future.
According to a research paper entitled ‘Competitive Strategy between Gojek and Grab using Game Theory’ conducted by Tobing, this competition between Gojek and Grab can be modeled by Game Theory’s two person zero-sum-game, in which the gains made by one player is equivalent to the losses of the other player. At the moment, Gojek and Grab are both employing mixed-strategies. That is, they are each employing combinations of strategies with fixed probabilities that keep the other player guessing on which strategy will be employed at any point in time.
Each company should strategize only in light of what the other agent is doing. In this circumstance, like many others in Game Theory, unilateral action for profit is impossible, and thus any corporate action must keep in mind the actions of their competitors. Due to the fact that this is a two-person zero sum game, the Prisoners’ Dilemma does not apply and thus collusion is not a viable means for profit at this point in time. In this way, Gojek and Grab should strive to optimize their strategies by competing aggressively with each other using Game Theoretic reasoning.
http://repositori.usu.ac.id/bitstream/handle/123456789/5800/140803025.pdf?sequence=1&isAllowed=y