SINA and Alibaba in strategic social commerce alliance
The two companies will cooperate in user account connectivity, data exchange, online payment and online marketing, among other things, and will explore new business models for social commerce based on the interactions of the hundreds of millions of users on Weibo and on Alibaba's e-commerce platforms. The strategic alliance is expected to generate approximately $380 million in advertising and social commerce services revenues in aggregate for Weibo over the next three years.
The brands in the alliance are SINA's subsidiaries, including PRC subsidiaries of Weibo Corporation, and several businesses affiliated with Alibaba Group, including Taobao Software and Zhejiang Tmall.com Technology.
SINA also announced that Alibaba, through a wholly owned subsidiary, has invested $586 million to purchase preferred and ordinary shares representing approximately 18% of Weibo on a fully-diluted basis. SINA has also granted an option to Alibaba to enable Alibaba to increase its ownership in Weibo to 30% on a fully-diluted basis at a mutually agreed valuation within a certain period of time in the future.
"We are excited to partner with the largest e-commerce platform in China to develop social commerce. We believe e-commerce will play a vital role in building an eco-system around Weibo's open platform," said Charles Chao, chairman and CEO of SINA.
"We believe that this strategic alliance helps to create a stronger Weibo. It affirms our view of the vitality and importance of social media in unleashing value in e-commerce activities. We believe that the cooperation of our two robust platforms will bring unique and valuable services to Weibo users, as well as making the mobile Internet a core part of Alibaba's strategy," said Jack Ma, chairman of Alibaba. ■