Alibaba Challenges Tencent’s WeChat With Instant-Messaging App

Alibaba Group Holding Ltd., the largest e-commerce company in China, is offering an instant-messaging app as it tries to compete against Tencent Holdings Ltd. (700)’s WeChat in the world’s biggest smartphone market.

The app, called Laiwang, allows users to form group chats with as many as 500 people and share maps, videos and stickers, according to Alizila, a website run by Alibaba. It has about 1 million existing users, and the company wants to boost that to 100 million, the company said in an e-mail yesterday.

Alibaba’s competition with Tencent comes as smartphone shipments in China are projected to rise to 450 million units next year from 360 million this year, according to International Data Corp. More than 84 percent of China’s Internet users regularly access instant messaging, making it the most popular online application in the country, according to data compiled by Bloomberg.

“Alibaba wants to gain as many access points for users as possible,” said Alex Wang, a Beijing-based analyst at Internet consulting group IResearch. “Tencent has an existing advantage with WeChat and lots of users. It would be a challenge for Alibaba to compete in that sense.”

Tencent’s QQ instant messaging service had 818 million monthly active users at the end of June, and WeChat, known as Weixin in China, had 236 million. Tencent’s shares fell 0.2 percent to HK$409.20 at the close of Hong Kong trading yesterday.

Photographer: Tomohiro Ohsumi/Bloomberg

The WeChat logo is displayed on the Tencent Holdings Ltd. website on an Apple Inc. iPhone in this arranged photograph in Tokyo. Close

The WeChat logo is displayed on the Tencent Holdings Ltd. website on an Apple Inc.... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

The WeChat logo is displayed on the Tencent Holdings Ltd. website on an Apple Inc. iPhone in this arranged photograph in Tokyo.

Laiwang has privacy settings for photos and a “burn after reading” feature that deletes a message after the recipient has read it, according to Alizila.

Analysts expect Alibaba may consider an initial share sale that could be the largest since Facebook Inc. (FB) The Hangzhou-based company has a value of about $87 billion, according to the average of 11 analyst estimates released in July.

The number of people in China accessing the Internet via mobile devices rose 10 percent to 464 million by the end of June from six months earlier, according to the China Internet Network Information Center. That’s greater than the population of any other country except India.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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