International Conference on Business Management, Innovation, and Sustainability (ICBMIS-2020)

Souq-Amazon and Careem-Uber Acquisition Deals: An Analytical

Study of the Two Merging Giants in the UAE

Salma Al-Omaria, Malini Bishnoib, Mukund Jakhiyac*

abc Amity University Dubai Campus, P.O. Box 345019, United Arab Emirates

ABSTRACT

This paper involves a pioneering study that delves into the relationship between the acquisitions of UAE based companies and the diversification of the UAE
economy. More specifically, it studies the acquisition of Dubai based ride-hailing company Careem by ride-hailing giant Uber Technologies, Inc. and the Dubai
based e-commerce company Souq.com by e-commerce giant Amazon.com, Inc.

This paper uses a qualitative method of research and employs the use of secondary sources from economic journals and books as well as news reports and articles.
This study deploys case study research design in order to understand the focused efforts of the two giants and how the acquisitions have led to much growth in
GDP and an overall increase in the diversification of the UAE economy. The findings of this study reveal that the said acquisitions are likely to lead to efficiency
and add competition to domestic companies in the e-commerce and ride-hailing sectors in the market in the UAE. They are also expected to help meet the growing
demands of customers owing to their greater global capabilities bringing in international commodities and services. These acquisitions can also become a
motivation for innovation in the region, especially with the increased human and physical capital.

This study is preliminary in nature, as the acquisitions are very recent developments, in finalization stages. The information available on the same was very limited
at this point in time. There is certainly scope for further research on the subject both as a quantitative and qualitative assessment.

Keywords:
Diversification
Careem
Uber
Souq.com
Amazon.ae.

© 2020-ICBMIS. Hosting by SSRN. SSRN is an open-access online preprint community, owned by Elsevier. All rights reserved
Peer review under responsibility of International Conference on Business Management, Innovation, and Sustainability.

Salma Al-Omari Dr. Malini Bishnoi CA. Mukund Jakhiya

Student at
School of Humanities Arts and Social Sciences
Amity University Dubai Campus
P.O. Box 345019, UAE
Tele Phone +9714 4554 900,
Assistant Professor at
School of Humanities Arts and Social Sciences
Amity University Dubai Campus
P.O. Box 345019, UAE
Tele Phone +9714 4554 900,
Assistant Professor at
School of Management and Commerce
Amity University Dubai Campus
P.O. Box 345019, UAE
Tele Phone +9714 4554 900,

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1. Introduction

This paper undertakes the study of the acquisition of UAE based ride-hailing company, Careem by the ride-hailing giant, Uber Technologies, Inc., and the
UAE based e-commerce company, Souq.com by the e-commerce giant, Amazon.com, Inc., with the aim of understanding what they meant for the UAE
economy as it posits now.
The acquisition by Uber Technologies, Inc. has been studied and compared to a similar acquisition of a scooter and electric bike-sharing firm in the United
States under the name of JUMP. While the acquisition by Amazon.com, Inc. has been studied and compared to a similar acquisition of an e-commerce firm
in China under the name of Joyo.com, Limited.
The term ‘acquisition,’ as it is understood in business and economics, is the process of gaining control over another firm, usually through the purchase of
shares or assets of the company. (CFI, nd.) According to Morakabati et al (2014), there is a strong association between economic diversification and
economic development. Economic diversity is achieved when the country's income is generated from different sources that are not related to each other
directly. In the context of the UAE economy, this diversification aims to become less reliant on revenues from natural gas and petroleum, as per the
government. (Gov. vision, 2021)
These acquisitions allow for highly successful international companies to transition and expand into the UAE and MENA region markets smoothly. These
acquisitions eliminated entry barriers into the market; they guaranteed the presence of the local knowhow from the acquired companies taking advantage of
their established place in the market. Needless to mention, the acquisitions add to the global capabilities of the acquiring companies as they are international
giants in their respective fields.
Furthermore, the growth of these companies in their respective sectors in the economy contributes to the diversification of the UAE economy and overall
GDP growth.
This paper critically evaluates research evidence in the field and discusses various research methodologies and strategies adopted. The paper concludes with
key findings of the study and analysis of the same.

2. Literature Review

To undertake this study, many authors’ works were referred to and analyzed to build-up to the conclusion of the impact of these acquisitions on the UAE
market and diversification of its economy. A review of secondary literature was undertaken from various economic, financial and news journals to understand
the detailed process of the acquisitions and their impacts on the market and contributions to the diversification of the UAE economy.
The Corporate Finance Institute (CFI) has discussed and defined acquisition as “when one company purchases a portion or all of another company’s shares
or assets. Acquisitions are typically made in order to take control of and build on, the target company’s strengths” and in the context of these two companies
and their acquisitions in the MENA region, this definition applies. The CFI provides the causes and effects of acquisitions as following:
Causes: Effects:

Fig 1: Causes and effects of acquisitions.

In the context of the above, the possibilities due to this new formation may be reviewed as follows: Reduced entry barriers: The acquiring companies get
the advantage of an already established firm in the MENA region thereby significantly reducing the legal, regulatory, human resource and various other
entry barriers. Market power: Undoubtedly, the acquiring companies have capitalized on the built market of the acquired firms and have forayed into the
MENA region’s market thereby increasing their market power and geographical reach. New competencies and resources can be achieved with the
partnering of local know-how with global capacities and resources. For example; Amazon.ae brought in 30 million products to the consumers as compared
to Souq.com’s previous 9.4 million products. (The National). Similarly, the acquiring companies have added value to business in the MENA region in the
respective fields in ways more than one. Uber Technologies, Inc. and Amazon.com, Inc. provide access to experts in the respective fields

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and have brought in access to capital with their financial might. Furthermore, the human capital of the acquiring companies has brought in fresh ideas and
perspective, which may not be necessarily fresh but may be completely new to the MENA region’s market. For example; Amazon Prime, etc...
However, challenges emerging from such transactions also cannot be ignored. With regards to possible culture clashes, employees and activities from the
acquiring companies and acquired companies may not integrate as well as anticipated. In this case, however, given that both companies have been operating
in the same field of business (Careem and Uber Technologies, Inc. in ride-hailing and Souq.com and Amazon.com, Inc. in e-commerce) this issue is less
likely. Secondly, acquisitions may often lead to duplication of work and duties of employees. This can cause excessive costs to the company which can
lead to reorganization and job cuts to maximize efficiencies. Thirdly, the acquiring company and the acquired company may have distinct objectives that
may lead to a situation of conflicting objectives. Fourthly, the businesses of the merging companies may be poorly matched due to the target company
bringing in more hardships than prosperity. Fifthly, the acquisition may result in pressure on suppliers whose capacity may not be enough to provide the
additional services, supplies, or materials that will be needed. Last but not least, an acquisition may also sometimes lead to hurting the brand image of
companies.
According to Andrew J. Sherman in the book Mergers and Acquisitions from A to Z (2018), acquisitions and mergers can be fundamental for the health of
an economy. More specifically, acquisitions and mergers provide an opportunity for companies to capitalize on value created in other companies.
Furthermore, fierce competition is another incentive for acquisitions and mergers, especially with the recent globalization and the establishment of the
‘global village’, many companies turn to acquisitions and mergers in order to grow their market share internationally in a more cost-effective and efficient
manner.
In The Wealth of Nations Adam Smith, the father of economics, discusses the concept that thriving economies are to be credited to competitive markets. He
moves on to discuss how competition advances innovation, product efficiency, and encourages lower prices. He also emphasizes the need for protective
policies when it comes to competition in the market so as to not let any dominant company abuse its power. The concept proposed by Adam Smith can be
further applied to these acquisitions; they stand to increase the competition in the UAE market and can in turn advance innovation, product efficiency, and
encourage lower prices during its time in the region.
Gilles Mcdougall, in a paper titled The Economic Impact of Mergers and Acquisitions on Corporations (1995), aimed to study the impact of mergers and
acquisitions specifically on the Canadian market and economy. In this study it was deduced that; when foreign interests take control of a Canadian
corporation, profitability remains relatively unchanged or even declines. However, in the long run, profitability increases and eventually surpasses the
average for all domestically controlled corporations. This research further shows that the liberalization of foreign investment and the entrance of these firms
into the domestic market improved the competition in the economy, which traditionally makes the economy better off, and they were more able to invest in
the market thanks to their greater size, financial resources, and global or international capacities.
Critics of the Souq-Amazon and Careem-Uber acquisitions such as HRH Prince Khaled bin Alwaleed bin Talal, founder and CEO of KBW Ventures (2019)
argue that they have brought on false hope to a lot of people as they thought their entrepreneurship ventures would become ‘the next Souq.com’ or ‘the next
Careem’. He then went on to discuss how there had been $13.3 million in deals in one year in Saudi Arabia, which equates to a day in Silicon Valley. He
explained that the issues surrounded legislation and banking laws, not the lack of entrepreneurial spirit in the MENA region. (Gibbon, 2019) This criticism
seems to work in favor of the acquisitions that took place indicating that it is much easier to enter as an established company into the MENA region’s market
as opposed to starting up your own company from scratch. HRH Prince Khaled bin Alwaleed bin Talal also indicated that these acquisitions are good for
the region.
Mr. Mouchawar, who was the CEO and co-founder of Souq.com claims that the acquisition allowed these companies to provide what is best for their local
consumers with global capabilities. This implies that there is an advantage to the acquisition of Souq.com by Amazon.com, Inc. as there would be more
resources, higher efficiency and more human and physical capital which would drive the business. (Mouchawar, 2017)
The staff at Uber Technologies, Inc. claim that this acquisition brings Uber Technologies, Inc.’s global expertise with Careem’s regional and local
knowledge. (Uber, 2018) They also claim that this acquisition was the largest technology-related transaction in the Middle East region to date.
According to The Times (UK), Amazon.com, Inc. bought into China as it acquired China's largest online shopping company, Joyo.com, Limited; giving it
access to up to 80 million web-based consumers, at the time. Joyo.com, Limited was changed into Amazon.cn. Amazon.com, Inc. paid $75 million for
Joyo.com, Limited in 2004 which equals approximately $102 million in today’s money and compared to the $580 million paid for Souq.com in the UAE, it
seems like a minute amount. (New York Times, 2019)
In the case of China, the economy has been increasingly open to foreign presence however, it is still hard to conduct foreign business in the country. Moving
on, Televisory Analytics did a research by the name of Failure of Amazon in China, an Analysis, it brought forth an analysis of why the acquisition of
Joyo.com, Limited did not end in success. The main argument was that Amazon used the same operating model in China that it uses internationally which
would not work in China. In addition, it compares Amazon with its main source of competition and one of the most successful e- commerce sites in China;
Alibaba. It is pointed out that Amazon has 2 million sellers worldwide, whereas Alibaba has 8.5 million. This further goes on to argue about how the
increased price competition between the two makes a huge difference; stiff competition results in low prices and attracts the price- sensitive consumers in
China. Hence in order to compete with the e-commerce giants, Amazon would have to endure the revenue losses in China for a longer period and that, in
turn, would require more investment. This may not be the best strategy for Amazon as it would incur huge losses in the meantime. Consequently, we see
that Amazon has failed to grasp the market in China and has missed the opportunity to sustain its business. In 2015, Amazon opened a store on Alibaba’s
platform to increase its customer base by paying a fee to its rival. This suggests that Amazon is attempting to sustain

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its business in China, but they cannot continue to do so by contributing to its rival’s profit. Amazon is becoming more diversified in its business with each
passing year, but according to this analytical paper, it could not sustain its business in China.
According to TechCrunch, Uber Technologies, Inc., and The National, Uber bought into the bike-sharing industry in 2018 when it paid, reportedly, $200
million for JUMP. (Forbes, 2019) Moreover, it was claimed that this acquisition allows Uber to prove its commitment to becoming an urban mobility
company as opposed to a taxi alternative. This is also true when it comes to the acquisition of Careem in 2019 for $3.1 billion consisting of $1.7 billion in
convertible notes and $1.4 billion in cash. (The National, 2019) JUMP became a wholly owned subsidiary of Uber Technologies, Inc. just as Careem will
become in the first quarter of 2020.
When discussing the diversification of economies, more specifically the diversification of the United Arab Emirates (UAE) economy, an IMF paper that
goes by the name of Economic Diversification in Resource Rich Countries aims to explore the diversification efforts of resource rich countries such as the
UAE. Further, it brings forth reasons for countries to diversify their economies. The main reason given and justified was that diversified economies tend to
perform better in the long run. As opposed to those that focused on certain resources. Another argument for diversification is that producers tend to get
exposed to more information in the process; this allows for more value added in different sectors of the economy. More specifically, when it comes to Dubai,
it is obvious that the city (and country) aimed to diversify its economy and move further away from oil-based income. The model that Dubai follows is one
that aims to attract foreign investment to the city in order to expand sectors of the economy and further diversify the economy as a whole.
Moving on to the United Arab Emirates (UAE) as a whole, according to the World Bank Group publication for the Gulf Corporation Council (GCC)
Economies in their fifth issue titled Economic Diversification for a Sustainable and Resilient GCC, the economic indicators in the UAE suggest that non-
oil growth maintained its momentum from 2018 through at least mid-2019, while a significant decrease in oil production weakened growth in the oil sector.
Moreover, it is suggested that non-oil sectors will drive growth in the more diversified economies in the GCC; more specifically in the UAE’s case, it will
see a boost from tourism from Expo 2020. The regional director in the World Bank Group (GCC Countries and Middle East and North Africa Region) Issam
Abousleiman, in this publication for the GCC economies, suggests that diversifying the GCC economies is vital and they should maximize their natural
resource advantages as they heavily invest in new areas of economic activity.
On the one hand, there is a good amount of information and research done on the basis of these topics and their outcomes but on the other hand, there isn’t
nearly enough of it. There is much more that needs to be investigated in terms of statistical analysis as well as more detailed economic and financial research.
Expanding upon this research will provide a much clearer and richer pool of information on these acquisitions and their effects on the market and the
diversification of the UAE economy.

3. Research Methodology

3.1 Definitions
Research is a function of designing a methodology to reach one’s target sample. There are two main kinds of research designs as such viz: (i) Qualitative
research design which is implemented in cases where a relationship between collected data and observation is established. (ii) Quantitative research design
which is implemented in cases where it is important for a researcher to have statistical conclusions to collect actionable insights. (Sacred Heart University
Library)

3.1 a Applications to this paper

This paper used a qualitative approach to research as there were limitations in terms of lack of substantive information concerning the respective markets in
the UAE. This research uses case study research design which is widely used in understanding and investigating hypotheses. In this context, case study
research design was used as these acquisitions are quite contemporary occurrences in the market and therefore there was a lack of information on the given
topic. (Yin, 1994) Due to this, a case study design was used in order to understand what it means for these companies to come together and what overall
advantages they would experience. There was a plan to contact and interview key stakeholders of the two companies which, in the end, proved to be a
difficult task. And in turn a systematic review of literature was used to aid in this case study in order to understand the focused efforts of the two giants and
how the acquisitions have led to much growth in GDP and an overall increase in the diversification of the UAE economy. The procedure for this kind of
research is a secondary review of data. (Secondary data is the data which is collected by someone other than the user).

3.2 Research instruments employed

3.2a Data collection process

The data in this paper was collected and presented by looking into and collecting a considerable amount of information from various resources; anything
that becomes a means of collecting information for a study is called a research instrument. There are different research instruments for different types of
research viz: qualitative methods use a review of documents; the results are explanatory rather than predictive. Quantitative methods are numerical. (Sacred
Heart University Library) (ADP Health) The data used in this paper was collected from books, magazines, and newspapers as they had information on
economic diversification and the current acquisitions taking place. Reports prepared by research scholars and economists were also

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reviewed in order to understand the acquisitions and diversification better. Moreover, a multitude of web articles were referred to and analyzed for the
purpose of this paper such as the UAE government website. These sources had a myriad of rich information to be used in this paper and these instruments
helped build in the reliability (i.e. consistency) and validity (i.e. accuracy) factors.

3.2b Limitations
Considerable amount of research had to be done for this research work as some parts of these acquisitions are ongoing today. However, this paper has had
certain limitations as well, which essentially had to do with the fact that one could not undertake primary data collection due to time and cost constraints as
well as the fact that a paper with such an investigative nature requires a more detailed survey and first-hand interview which was not possible at this stage
presently. As such there were no samples taken or sampling strategies adopted for this paper.

4. Discussion

This is an analytical study based on existing extant evaluative literature about the two mergers that undertakes the acquisitions of UAE based ride-hailing
company Careem by ride-hailing giant Uber Technologies, Inc. and the UAE based e-commerce company Souq.com by e-commerce giant Amazon.com,
Inc. respectively. The acquisitions of these companies by their multinational equivalents have had a great impact on the market and the diversification of the
UAE economy and have brought in companies with global capacities and capabilities into the region.
These acquisitions lead to efficiency and add competition to domestic companies in the e-commerce and ride-hailing sectors of the market in the UAE. They
also help to meet the growing demands of customers as the acquiring companies have global capabilities and can bring in international commodities and
services. These acquisitions can also become a motivation for innovation in the region, especially with the increased human and physical capital.
Furthermore, the growth of these companies in their respective sectors in the economy contributes to the diversification of the UAE economy. This helps
increase the GDP gained from non-oil sectors.

4.1 Comparative analysis

The investigation of these acquisitions was aided by a rather niche comparison made between the present acquisitions and previous acquisitions by the same
acquiring companies, viz: the acquisition of Joyo.com, Limited by Amazon.com, Inc. and the acquisition of JUMP by Uber Technologies, Inc.

4.1a Amazon.com, Inc.

It is not uncommon for Amazon to buy into specific regional markets as seen in its acquisition of the Chinese e-commerce website Joyo.com, Limited in
2004 for $75 million (in today’s value approximately, $102 million) and in its more recent acquisition of the UAE-based e-commerce website Souq.com in
2019 for a staggering $580 million. The websites respectively then changed to Amazon.cn and Amazon.ae.
The most obvious and the biggest difference is in the price of the companies. With a $478 million difference, Souq.com seems to be of more use to
Amazon.com, Inc. as it had already established its presence and would make for an easy transition into the region.
In April of 2019, Amazon.com, Inc. announced that it was closing its business in China. According to the New York Times, Amazon.cn had struggled in
China despite operating there for more than ten years and the business was closed on July 18, 2019. This was due to the growing competition from other
local e-commerce biggies like JD.com and Alibaba.com having trans-border aspirations. As well as the fact that Amazon did not change its approach to fit
the Chinese market but used its usual global approach, which could not survive in China. (New York Times)

Fig 2: Timeline of Souq.com acquisition.

In terms of Amazon.ae, there is competition in the region starting with local companies, Noon.com and Namshi.com. This can pose several challenges about
a pattern repeating like the one with Amazon.cn. Regardless, in the meantime, in the UAE e-commerce penetration is 4.2% as a percentage of total

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retail sales, the highest in the MENA region which leads to brick and mortar retailers competing against Amazon by improving their online shopping
experience. (UAE Gov.) The UAE experience of the acquisition is yet to unfold with a high bar of expectations.

Fig 3: Net international sales. (revenue)

The figure above represents data collected from the Amazon annual reports on the net international sales (revenue) over the span of four years (2016-19).
These years were chosen in order to show the difference in revenue in the period before (2016), during (2017) and after (2018/19) the acquisition of the UAE
based Souq.com, now Amazon.ae. The international sales segment refers to the acquisition of Souq.com as well as other international ventures of Amazon.
As demonstrated in the figure, the revenue gained from international sales increased significantly in the year that Amazon acquired Souq.com and even more
so in the coming years.

Fig 4: Net international sales. (percentage)

The figure above represents data collected from the Amazon annual reports on the net international sales (percentage) over the span of four years (2016-
19). These years were chosen in order to show the difference in revenue in the period before (2016), during (2017) and after (2018/19) the acquisition of the
UAE based Souq.com, now Amazon.ae. This figure demonstrates the percent of international sales as a part of total revenue. The percentage of international
sales has been steadily decreasing with the growth in Amazon Web Services (AWB) and the increase of its popularity.

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Fig 5: Percentage growth of international sales.

The figure above represents data collected from the Amazon annual reports on the percentage growth of international sales over the span of four years (2016-
19). These years were chosen in order to show the difference in revenue in the period before (2016), during (2017) and after (2018/19) the acquisition of the
UAE based Souq.com, now Amazon.ae. This figure demonstrates the percentage growth of total international sales. The percentage of international sales
has been increasing year by year, less so in the later years due to an increased spending on these international ventures. (Amazon Annual Reports)

4.1b Uber Technologies, Inc.

It is not uncommon for this ride-hailing giant either, to buy into specific regional markets as seen in their acquisition of the United States based bike sharing
platform JUMP in 2018 for reportedly $200 million and in their more recent acquisition of the UAE-based ride hailing platform Careem in 2019 for a
confounding $3.1 billion consisting of $1.7 billion in convertible notes and $1.4 billion in cash. Both of these companies are wholly owned subsidiaries of
Uber Technologies, Inc. (Uber) Before Uber’s acquisition of Careem, they expressed concern that they would not ultimately go through with the transaction
due to the local markets’ unique legislation and practices. This is also due to the vast expansion of Careem in the MENA region; approximately 15 countries
of operation.
They moved on to discuss that in order to remain competitive in certain markets they have lowered fares or service fees, and have offered significant Driver
incentives and consumer discounts and promotions, which may adversely affect their financial performance. This can also be a reason as to why the domestic
market in the UAE may become more competitive as a result of this acquisition. Furthermore, in terms of the acquisition of Careem, according to Uber
Technologies, Inc., this was the largest technology-related transaction in the Middle East region to date which has brought it tons of capital. (Uber) (The
National, 2019)

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Fig 6: Timeline of Careem acquisition

Fig 7: Revenue Growth bye Geographical Region in the first quarter of 2020. (percentage)

As for the financial reports of Uber Technologies, Inc., the records for the period relevant to the acquisition of Careem is represented by figure above. Data
collected on the revenue growth by geographical region in the first quarter of 2020 is shown. This year was chosen in order to show the percentage growth
of the business in the region for the period relevant to the acquisition of Careem (January 2020). The revenue in the region has experienced a growth of 13%
despite the effects of COVID-19. This data can help to indicate and further prove the improvement in the health of the company in the region.
The acquisitions of local companies by their highly successful, international counterparts can have lots of merits. Namely, more competition which leads to
higher efficiency, motivation for innovation and increased human and physical capital. This is evidenced and thoroughly discussed to be the main advantage
of competition in an economy by Adam Smith in The Wealth of Nations. All these things come together and form a bigger, better service to be offered to
consumers. As well as more commodity options and an increase in the GDP of the country. The unfolding of the synergies of the merging companies is yet
to be experienced in the UAE, although the expectations are huge.

4.1 c Summary of Dubai-based deals

Key Features Souq-Amazon Careem-Uber

Local business and its model Dubai-based; focused on e-
commerce.
Foreign business and its model American multinational tech-
company; global e-commerce
leader.
Dubai-based; focused on ride-
hailing.
American multinational ride-
hailing company; global ride-
hailing service leader.

Deal value $580 million. (approx. 2.13 $3.1 billion. (approx.11.38

billion AED) billion AED)

Timeline May 2019 January 2020

Type of deal Complete acquisition of Careem is a wholly owned

Souq.com. subsidiary of Uber.

New local brand name Souq.com is replaced by Careem is still operating as an

Amazon.ae. independent company under
the same brand name.

Fig 8: Summary of deals.

4.2 Impact on the UAE economy

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4.2a Contribution to the diversification of the UAE economy

Economic diversification is when a country has incomes from many different sources, the GCC economic diversification aims to move away from oil- based
income and move more towards non-oil-based income to ensure the sustainability and growth of their respective economies; the GCC countries are striving
to reduce their dependence on oil and gas. Going into the details on the UAE and its path to diversification; non-oil exports typically represent more than 40
percent of total exports. Non-oil exports in the UAE usually represent a greater share of goods exported than in other GCC economies; its economy is more
diversified than the economies of most of its GCC peers. The effort towards diversification has been evident; economic stimulus measures were announced
by Abu Dhabi and Dubai (2018) and seek to further strengthen the non-oil economy of the emirates through regulatory reform, business performance and
public investment. Countries in the GCC have reformed their business environments to encourage further diversification; the plan in Dubai includes a
reduction of fees on commercial entities from 5 to 2.5 percent. The government introduced a series of measurements designed to encourage private investment
in the country including opening 122 economic activities as well as the UAE cabinet passed legislation that would promote 100 percent foreign ownership
in 2019 (World Bank Group, 2019). The UAE maintains the highest ranking in the MENA region and is among the top 20 best performing economies
globally at number 16 according to the World Bank.

Fig 9: UAE summary table of economic indicators.

The Gross Domestic Product (GDP) of a country is a measure of the value of all goods and services produced within a country’s geographical borders despite
the nationality of the producers. GDP can be split into nominal and real; nominal GDP represents this value unadjusted for inflation while on the other hand,
real GDP represents the value of nominal GDP adjusted for inflation. This allows for the real GDP to reflect the changes in real output as opposed to just
the changes in output due to the fluctuations in price. Once we look into the real GDP percent change as reflected in the above figure, it is obvious that there
is a growth and increase in the real output of the country. We can clearly see that in the years 2018 and 2019 the real GDP increased by a percentage of 1.7
and 1.8 respectively. This is a reflection of the increased economic activity in the country that is, according to the World Bank Group, related to the increased
diversification of economic activities. However, as we can see in the 2020 forecasts, the real GDP was set to increase by 2.6%, this is not taking into account
the effects of the COVID-19 economic slowdown, therefore we cannot use it to come to any conclusions.
As according to the father of economics Adam Smith, competition has a crucial part to play in the economy of any country, this stands true even today. This
is why it is important for every country to have its own set of competition laws and policies that are implemented to ensure that bigger firms in the market
do not abuse their power and do not, essentially, monopolize the market. In the UAE, the main competition law is the UAE Federal Law number 4 of 2012,
“The Law” and it is used to govern market behavior and prohibits the use of a dominant position in the market to restrict competition. The law requires that
certain acquisitions and mergers are granted ‘merger control clearance’ by the ministry of economy. In this way, acquisitions that could potentially be
damaging to the competition in the respective sector would be looked out for so as to not affect the competition in that field. This is one reason why the
market in the UAE is so inviting for firms.
Onto the acquisitions and their contribution to the diversification of the UAE economy, the UAE is an economic hub in the GCC region (World Bank Group)
and is, in turn, the top e-commerce consumer among GCC countries which allows for the further impact of these acquisitions on the consumers of the
country. These acquisitions contribute to the development in the diversification of the UAE as they aid in the growth of their respective sectors, which are
non-oil-based sectors, this in turn allows for the country to gain non-oil-based income. The UAE Ministry of Economy stated that e-commerce makes up 10
percent of total sales in the UAE. Official sources state that approximately 90 percent of the UAE population has internet as well as a mobile phone

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which has played a huge role in allowing the growth of e-commerce in the region (UAE Gov) as well as it creates a better business environment for e-
commerce based businesses.

Fig 10: Mobile, internet, and social media use in the UAE.

The UAE has a high penetration in terms of mobile and internet users which increases the chances of success of online platforms such as e-commerce site
Amazon.ae under Amazon.com, Inc. and ride-hailing platform Careem under Uber Technologies, Inc.
These companies play a large role in the UAE, so much so that Careem has launched a project with the Dubai Roads and Transport Authority (RTA) called
Hala, an e-hailing platform. (Khaleej Times, 2019)

Fig 11: Distribution of eCommerce volume by sector: UAE.

As concluded by the data provided by Dubai Economy and Visa International, the use of e-commerce for transport has increased by 1% from the previous
year and the use of e-commerce for general retail goods has increased by 1% from the previous year. The same study determined that the UAE's e- commerce
sales are projected to be $16 billion (approx. 59 billion AED) in 2019. At 5 per cent VAT rate, online sales are estimated to have contributed approximately
3 billion AED to government revenue in 2019. We can infer from this that the average consumer in the UAE will lean more and more towards e-commerce
and therefore a business in e-commerce in the UAE will, supposedly, have a better environment to grow year by year in the country. This directly affects
the acquisitions highlighted in this paper as their respective sectors have experienced growth.

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 International Conference on Business Management, Innovation, and Sustainability (ICBMIS-2020)
This study is preliminary in nature, the acquisitions being very recent developments, in finalization stages. As such, information available on the subject
was hard to come by. This paper scratches the surface and puts into motion a very significant phenomenon in the UAE economy. There is certainly scope
for further research in the future when more statistical information comes to fruition and can be further expanded upon.

5. Conclusion

This paper undertook the study of the acquisition of UAE based ride-hailing company Careem by ride-hailing giant Uber Technologies, Inc. and the UAE
based e-commerce company Souq.com by e-commerce giant Amazon.com, Inc. respectively. These acquisitions lead to efficiency as proved by the
respective profit statements as well as they add competition to domestic companies in the e-commerce and ride-hailing sectors of the market in the UAE as
reinforced by the competition law in the country. Consequently, domestic companies such as physical retailers competing against Amazon, are likely to
improve their online shopping experience. Furthermore, the main ride-hailing service provider in Dubai, the Roads and Transport Authority (RTA) in the
wake of this newfound competition launched a project with Careem, viz: a new ride-hailing platform by the name of Hala. This ultimately results in a more
efficient market; the rising level of stiff competition encourages firms to keep their market share by enhancing their overall performance and stiff competition
accordingly results in lower and lower prices and attracts consumers.
Amazon.ae brings in international commodities and services which helps meet the growing and diverse demand of customers. For instance, before becoming
Amazon.ae, Souq.com offered approximately 9 million products on their website which then extended to approximately 30 million products with the change
to Amazon.ae. with its exclusive features such as Amazon Prime. This seems to prove that there is a huge range of products and services being brought into
the market by this e-commerce giant and that there are many benefits to be gained by consumers.

Fig 12: The top 10 nations for future readiness.

The UAE is in the top 10 nations for future readiness according to IMD's World Digital Competitiveness ranking which indicates that there is improvement
in these sectors: the ease of starting a business, protection of intellectual property rights, the effectiveness of the banking and financial services in terms of
supporting businesses, communications technology, and e-participation. All of which can contribute to the diversification of the economy by providing
greater opportunity for the growth of business in the country.

Fig 13: Economic diversification and growth in the UAE.

According to the UAE embassy in the USA; the UAE had a 3.5% growth in real GDP in 2015 which was driven mostly by economic activity occurring in
non-oil sectors; this aids in the economic diversification of the country and works towards its vision for 2021 as well as the Abu Dhabi economic vision for
2030.
The above data shows that the UAE economy and consumer lifestyle allow for greater market presence and a bigger market share for these global entities
in the MENA region justifying the acquisition. These acquisitions can also become a motivation for innovation in the region, especially with the increased
human and physical capital. With such big investments taking place in the region, there is more capital to work with in terms of business ventures, etc.
Entrepreneurs are likely to be motivated by the outcomes for locally owned and operated businesses thus far receiving global interest as potential partners
and ripe grounds for inorganic growth. Furthermore, the growth of these companies in their respective sectors in the economy contributes to the

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 International Conference on Business Management, Innovation, and Sustainability (ICBMIS-2020)
diversification of the UAE economy and overall GDP growth. Companies in any non-oil sector of the economy contribute to the diversification of said
economy. This is one of the main goals of ‘Vision 2021’ and the ‘Abu Dhabi Economic Vision 2030’ of the UAE that works towards a more sustainable
economy and long-term prosperity as such.

Acknowledgments

I would like to acknowledge Dr. Malini Bishnoi and CA Mr. Mukund Jakhiya for their constant support, encouragement, and guidance. I would also like
to extend my gratitude towards all those who have helped me in completing this research successfully.

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