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[March 23, 2014]
Alibaba in US$215m deal with mobile messaging firm Tango [GCTL Insights Magazine (China)]
(GCTL Insights Magazine (China) Via Acquire Media NewsEdge) HONG KONG, Mar 24 (GCTL) - E-commerce giant Alibaba could be dancing all the way to its initial public offering in New York after acquiring a stake in US mobile messaging application provider Tango for US$215 million.
The deal marks a likely escalation of the competition between Alibaba and Tencent, Asia's largest internet company. Their rivalry is now poised to spill outside the mainland as the two firms back competing mobile messaging apps that are seeking to attract users around the world.
Tango, which provides free video messaging, text chats and voice calls, has 200 million registered users worldwide. The combined user base of Tencent's WeChat messaging app and its mainland counterpart Weixin reached 355 million last year.
Alibaba's new acquisition is part of the more than 20 billion yuan (HK$25 billion) in strategic investments made by the company since founder Jack Ma Yun stepped down as chief executive last year, South China Morning Post reported.
Ricky Lai, a research analyst at Guotai Junan International, said the investment in Tango would enable Alibaba "to integrate its e-commerce business into a competitive, feature-rich mobile messaging platform".
Alibaba led all investors in the Series D funding round of Tango, which raised US$280 million, the US firm said on Wednesday. Tango has generated a combined US$367 million in four financing rounds since it was launched in September 2009.
"We were simply blown away by the vision and quality of the team at Tango, and believe they have a disruptive way of looking at the mobile and messaging opportunity," Alibaba executive vice-chairman Joseph Tsai Chung said.
With its investment, Alibaba secured a minority stake, a seat on the board and an inside track on new developments in social networking, media and mobile messaging from Silicon Valley.
Tango co-founders Uri Raz and Eric Setton initially designed their app to allow for free, high-quality video calls on smartphones. The app has since become an innovative platform for more than 40 mobile game developers, advertisers and music messaging with partner Spotify, a European online music-streaming service backed by Li Ka-shing.
"[Alibaba's] investment is … a clear indication of the future potential of how content and services will be delivered," Raz said.
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