Alibaba Finds Another Place for Its Cash — China’s Version of YouTube
Chinese ecommerce retailer Alibaba is entering the online video space with an investment in Youku Tudou, the Chinese equivalent of YouTube.
The $1.2 billion stake comes from Alibaba Group Holding Limited and Yunfeng Capital, a private equity group founded by Alibaba executive chairman Jack Ma.The deal provides the groups with a 16% and 2% stake in the video site, respectively. Jonathan Lu, CEO of Alibaba, will take a seat on Youku Tudou’s board of directors.
Alibaba has been working to diversify its business, investing in a variety of companies and industries. The position in Youku Tudou is another in a line of strategic moves aimed at Tencent, Alibaba’s most powerful competitor. Together the companies dominate many aspects of China’s 618 million Internet users.
Alibaba recently moved into the messaging market with a $215 million investment in Tango, a WhatsApp-like messaging service popular in Asia. Reuters reports that Alibaba has spent $4 billion in the past six months on various investments. Tencent owns messaging services QQ and WeChat, the latter of which has more than 270 million users.
Alibaba remains a private company but is expected to issue an initial public offering in the near future. The ecommerce company is already a giant, claiming to process more sales than Amazon and eBay combined. The company’s IPO could be the biggest ever.
Youku Tudou is a publicly traded company, created in 2012 by a merger between two competing video sites.
“We are excited to cooperate and work closely with [Youku Tudou CEO] Victor [Koo] and his team to support their innovation in this key emerging space as well as accelerate our digital entertainment and video content strategy,” Ma said in a press release. “This is an important strategic initiative that will further extend the Alibaba ecosystem and bring new products and services to Alibaba’s customers.”