Online retailer Alibaba has bought 18% of the Sina Corporation’s Weibo, China’s extremely popular microblogging service. The purchase was made for $586M and shows an active attempt to move into social networking. This is a good move for both Alibaba and Sina as it gives Alibaba a vehicle to reach more buyers from Weibo’s tens of millions. From Sina’s end, it could bring in $380M in advertising in the next three years or so.
Weibo is now valued at $3.3B and Sina—which trades as SINA on the NASDAQ—saw a 10% increase. Like Twitter and Tumblr have recently done, Weibo are now in the position to actual turn a profit as microblogging and social networking services on their own have nothing in means of turning a profit. Luckily they are great platforms if you’re a large company that wants to reach a large amount of potential customers at one time. Not only that, but they add another dimension in advertising.
This business agreement opens the doors for Alibaba to increase its holdings in Weibo to 30% sometime in the future. Jack Ma mentioned that he believes that the agreement will work extremely well for both parties involved and that Weibo will help make the mobile internet element as part of the company’s strategy.