Alibaba needs a “starting point” to generate traffic for its non-e-commerce businesses, a role which the newly-acquired UCWeb can take on, a top executive said.
“[It's about] fusion and synergy,” said Yu Yongfu, the former chairman of UCWeb and the current head of Alibaba’s UC mobile business group, explaining the rationale for the deal.
Alibaba announced this week that is acquiring all the remaining shares of UCWeb, China’s top mobile browser firm, in the biggest merger in Chinese internet history.
UCWeb, which had earlier proclaimed that it was “not-for-sale”, is said to have been valued at around US$4 billion.
After investing and acquiring a broad range of non-e-commerce businesses in recent years, Alibaba needed a last piece of puzzle to fill its business map and gain an edge over competition.
That piece would be the UC browser.
The fiercest battles in the Chinese mobile internet industry are around web traffic. If we compare the industrial chain of internet as a river, the internet giants Baidu, Tencent, Qihoo, and UCWeb are all on the upstream holding and setting rules of major web traffic distribution channels, an internet industry observer noted, pointing to Baidu’s search engine, Tencent’s message app Wechat, Qihoo’s 360 mobile helper and the mobile browser of UCWeb.
According to data from consulting firm iResearch, UCWeb’s mobile browser has about two-third market share in its segment in China by the end of 2013. A spokesperson for UCWeb told EJ Insight that the mobile browser currently has 500 million users, with 150 million of them from overseas markets.
In addition, other “upper stream services” that UCWeb owns, such as game and app distribution platforms and the newly-launched mobile search engine Shenma will also offer room for imagination after they are merged into Alibaba’s kingdom.
Shenma is said to have garnered a market penetration of over 20 percent and a monthly active user base of over 100 million in just a few weeks since it was launched in late April, and become the second largest mobile traffic source for websites including group-buy website Meituan and Sina Mobile.
Meanwhile, its Android game distribution platform 9Game.com is among the largest of its kind. 9Game has generated revenue of nearly 800 million yuan last year, according to the UCWeb spokesperson.
Some observers say the deal could save UCWeb from a potential downtrend as smartphone users can access webpages directly through apps instead of a browser.
According to Yu and the official statement, Alibaba’s UC mobile business group will oversee the browser, mobile search, location-based services, mobile gaming, app store, and mobile reader operations, as well as explore overseas business opportunities.
Analysts believe the integration moves between Alibaba and UCWeb can be relatively simple as most of their businesses do not overlap.
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