Here's what made Didi finally want to merge with Uber in China

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A possible Lyft-Uber merger is what made Didi Chuxing finally agree to make a deal with the ride-hailing giant. 

That's according to a new story out from Rick Carew at the Wall Street Journal, which dives into the details of the Uber-Didi deal. According to Carew's story, Didi got nervous when Lyft hired investment bank Qatalyst Partners in June.

Here's what happened: 

"By late June, a new dynamic forced Didi to take another look at an Uber deal. Lyft, Uber’s chief competitor in the U.S., hired Qatalyst Partners LP, the boutique investment bank best known for helping tech companies find a buyer.

In Uber, Didi and Lyft had a common adversary. Didi and its Chinese backers had funneled money to Lyft, even making their systems compatible. The possibility of an Uber-Lyft merger gave Didi executives pause, giving them the impetus to pursue a deal with Uber, according to investors."

It all began in May, when investors began to worry about the billions of dollars being poured into the Uber-Didi battle. According to the Journal, investors began a backchannel to discuss a possible deal, which Didi initially rejected. After Uber began to scale up in China and Lyft hired Qatalyst Partners, the deal turned around in a couple of weeks, according to a major Didi investor interviewed by the Journal. 

But those weren't the only factors that motivated the deal — apparently, the warfare had taken an ugly turn in China.

Chinese scammers began ripping off both Uber and Didi by creating fake driver accounts and fake rides, listing them on Alibaba’s online shopping site Taobao, then collecting the big subsidies offered to drivers. Uber's official user accounts on messaging app WeChat were randomly deleted, and Uber drivers began receiving messages saying that Uber service had been terminated in China. These problems seemed to plague Uber more often than Didi — and coincidentally, both Alibaba and Tencent, which owns WeChat, are investors in Didi. 

For more on how the Uber-Didi megamerger came to be, head over to The Wall Street Journal.

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