Alibaba’s $215 million purchase in Tango is about copying, not competing with, WeChat

March 20, 2014
Obsession
Mobile Web
March 20, 2014

Chinese e-commerce giant Alibaba has purchased a $215 million minority stake in US-based Tango, which operates a mobile messaging app with about 70 million active users, mostly in the US and Europe. Tango is also a platform for games, music, and other activities—which means it bears a striking resemblance to WeChat, the messaging app owned by Alibaba’s archrival, Tencent.

The deal is yet another sign that China’s internet wars are starting to expand beyond the mainland’s borders. Tango is the latest of a string of acquisitions Alibaba has been making in the US over the past few years, including online retailer Shoprunner and other e-commerce sites. The company has also chosen to host its blockbuster initial public offering in New York, instead of Hong Kong—more proof of its focus on expanding beyond China and into the US.

The competition in the US, as in China, has never been more brutal. Tango will have to carve out market share as it battles with Facebook’s recently acquired WhatsApp, as well as other competitors like Snapchat, Line, Viber and Kik—even as it trails most of these apps globally, as The Next Web points out.

“The platform approach I believe is the winning strategy,” Tango co-founder Eric Setton told Reuters. “We’ve now seen it in a number of key markets, with Kakao in Korea or Line in Japan.”

It’s not certain yet that US consumers want so many bells and whistles in their messaging applications—not having them is a core part of WhatsApp’s philosophy. Alibaba is still playing catch up in the messaging revolution that’s swept China. If demand for messaging apps that do much more than chat reaches the US, Alibaba doesn’t want to miss out.

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