In a sign that social and ecommerce are becoming peas in the same pod, Alibaba, the Chinese Amazon giant, has purchased Weibo, China’s version of Twitter, for $586 million. The deal values Weibo at over $3 billion, according to Reuters.
A number of analysts, who peg Weibo’s value at between $600 million and $2.5 billion, have described the transaction as generous.
The deal stands out as one of the largest Internet deals in China and will likely affect the ecosystem significantly.
Alibaba retains an option to increase its stake by up to 30 percent at an unspecified price. The deal generates $380 million for Seina Corp.’s Weibo over the next three years, providing substantial revenue for a company that struggled to monetize its service.
Weibo works similarly to Twitter, which is blocked by the Chinese government. It has more than 500 million users.
In a statement, Alibaba chairman Jack Ma explained that the company hopes to integrate ecommerce options into the social microblogging service. He also explained that Weibo will provide much needed mobile expertise and insight as the company attempts to focus greater on mobile, key as Chinese consumers get over security concerns of paying with a mobile device. The companies will share data, develop better online payment methods, and cooperate on advertising, according to the Wall St. Journal.
“We believe e-commerce will play a vital role in building an ecosystem around Weibo’s open platform,” said Charles Chao, Chairman and CEO of SINA. “Weibo and Alibaba’s e-commerce platforms are natural partners. Together we provide a unique proposition not only to existing online merchants, but also to individuals or businesses, who wish to offer products and services on social networking platform to take advantage of the traffic shift toward social and mobile Internet.”
Alibaba is expected to soon go public with a valuation around $100 billion, according to Reuters.