Alibaba just launched China’s largest-ever internet deal

Jack Ma has a lot to cheer about lately.
Jack Ma has a lot to cheer about lately.
Image: Reuters/China Daily
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Another day, another Alibaba deal—except this one, according to the e-commerce giant (registration required), is the “biggest merger in the history of China’s Internet.” Alibaba is buying the remaining third of a mobile web browser maker UCWeb that the company doesn’t already own.

Without disclosing the price, Alibaba said the acquisition would be more than Baidu’s $1.9 billion purchase of the smartphone app distribution platform, 91 Wireless, last year. Alibaba already owned a 66% stake in UCWeb and Alibaba founder Jack Ma has sat on the board of UCWeb. Under the deal, 3,000 UC Web employees will join Alibaba and UCWeb chief executive Yu Yongfu will head the new business group.

From soccer clubs to chat apps and shopping malls, Alibaba has been spending like crazy in the lead up to its blockbuster IPO in the US—a total of about $4.8 billion in the last six months. The shopping frenzy has led some to question whether the company that began as an e-commerce firm is stretching itself thin.

The purchase of UC Web makes a little more sense. Alibaba’s rival Tencent has a stronger hold on Chinese mobile phone users via its chat platform Weixin, or WeChat, that allows people to chat, shop, invest and more. But when it comes to search, competition for mobile phone users is still open. China’s top search engine, Baidu, controls 60% of China’s search market but the traditional search engine is seen as ill-equipped (paywall) for mobile phone web surfing.

UC Web, in contrast, focuses mainly on mobile browsing and holds dominant market share in China of 66%, according to the company. And the UC Browser is one of top five apps downloaded in China. The two companies said that under the deal, they will focus on developing mobile internet browsers, games, search and location-based services, as well as selling apps.

UCWeb may also be good for Alibaba’s global ambitions in the long run. The company has a sizable market share in India of 32%, and a presence in Russia, Indonesia, and Vietnam. UC Web claims to have at least 10% marketshare in 10 countries—its browser is also offered in 10 languages.