China's Alibaba invests $215 million in Tango messaging app

Alibaba will get a seat on Tango's board of directors, and hold a minority stake

Chinese e-commerce giant Alibaba Group is investing US$215 million to acquire a minority stake and a seat in the board of Tango, a mobile messaging app from the U.S.

The investment announced Thursday by the Chinese company follows investments by some other Internet companies in mobile messaging apps. Last month, Facebook announced it would spend $16 billion to buy WhatsApp, a rival product also out of the U.S.

Days before that deal was announced, Japan's Rakuten said it would buy messaging app Viber for $900 million.

As smartphone use is soaring, tech companies across the world are scrambling for products that can attract millions of mobile Internet users. In China, Alibaba has been making more of its e-commerce services available on smartphones and tablets by developing apps, and even its own mobile OS.

Alibaba did not discuss how it intends to benefit from its investment in Tango. 31 percent of the app's users come from North America, while another 29 percent are from the Middle East.

Over the last six months, Alibaba has been investing in U.S. Internet companies it believes are promising. These include ShopRunner, an online retailer, and Quixey, a search engine for apps.

In a statement, Joe Tsai, Alibaba's executive vice chairman, said the e-commerce giant was "blown away" by Tango's vision and the quality of its team.

But according to a source familiar with the matter, one of the reasons Alibaba invested in Tango was because of its engineering expertise in mobile messaging.

Tango, which has 70 million monthly active users, works as an app that can enable video and voice calls, along with text messaging. Alibaba hopes to learn from Tango, and the company could even one day use its technology, although no such plans have been made yet, the source said.

In China, Alibaba has its own messaging app called Laiwang that competes against WeChat, a messaging app from local rival Tencent. WeChat already has 355 million monthly active users, and Tencent is spending millions on promoting the app outside of China.

The rivalry between Alibaba and Tencent has heated up recently. Earlier this month, Tencent announced it would join forces with Chinese online retailer JD.com, as part of a deal that could challenge Alibaba's hold over the local market. With Tencent's WeChat, the company has a popular app that can be tied to e-commerce functions such as making online purchases, or hosting advertisements for vendors.

Alibaba has been making its own investments in China to buttress its mobile business. Last year, it bought a stake in Sina Weibo, one of China's largest social networking sites, as a way to promote its e-commerce services. In addition, Alibaba is working to acquire one of China's largest online mapping providers for $1.1 billion.

Tags mobile applicationsbusiness issuesAlibaba Groupinvestmentsmobile

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