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Business trends

Only 'No. 1' companies will survive in AI era, says SoftBank CEO

Rivalry heats up as ride-hailing companies head to public markets

Masayoshi Son attends a news conference in Tokyo last November.   © Reuters

TOKYO -- SoftBank Group Chairman and CEO Masayoshi Son on Monday said only the top players will survive in the age of artificial intelligence, shrugging off concerns over the rise of rivals in industries that his near-$100 billion technology fund invests in.

The remarks come as Lyft, the second-largest ride hailing company in the U.S., prepares to go public as early as this month. SoftBank's Vision Fund is the biggest shareholder in the top player, Uber Technologies, and also invests in peers like China's Didi Chuxing and Singapore-based Grab.

"Some [investors] are happy and proud to say, 'we invest with low cost and we are big shareholders in number two companies'," Son said during a symposium hosted by the Milken Institute in Tokyo. "I say, that's by chance. Sometimes they will succeed. By probability, a number two company succeeding is very low in our industry."

Uber is mulling an acquisition of Dubai-based peer Careem for $3.1 billion, various media reported on Monday, in a departure from earlier decisions to exit China and Southeast Asia. SoftBank completed the purchase of a 15% stake in Uber for $7.7 billion in January 2018 and later transferred that stake to the Vision Fund, which is backed by Saudi Arabia as well as SoftBank's own capital.

Meanwhile, Lyft's biggest shareholder is Japanese e-commerce group Rakuten, which is also an investor in Careem. Hiroshi Mikitani, CEO of Rakuten, has long been considered a rival to Son.

Son argued that compared to traditional industries which depend on physical storefronts, technology companies can go global "with less than a second," and consumers will seek out the number one service. "Among our family we have 90% market share" in the ride-hailing market, he said. "If that industry takes off, we win. That's the simple strategy."

Rakuten declined to comment.

Son also shed light on why he set up the Vision Fund, which has become the world's largest investment vehicle dedicated to technology. He recalled a missed opportunity to buy a 30% stake in Amazon, now one of the world's most valuable companies, in its early days for $100 million because its CEO Jeff Bezos wanted $130 million.

"It was a big mistake I did not make that actually happen," Son said. "I just didn't have enough cash. But my vision, understanding of the image was right. This time, I don't want to make the same mistake and same excuse. So I prepared money."

The Vision Fund focuses on investing in leaders in the industry of artificial intelligence. The fund has deployed about half of its committed capital by December. Sources say a second fund of a similar scale is in the works, although Son has said the terms of the second fund, including its size and participants, have not been decided.

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