The $70 million purchase of a U.S. biometric security company will barely dent Ant Financial's bank balance, but it's an important sign Jack Ma's empire is starting to look more closely at foreign technology.
While investments aren't new for Alibaba and its Ant payment affiliate -- they've closed about 100 deals between them -- full acquisitions are rare and foreign takeovers almost unheard of. Instead, Ma and his team seem to prefer investing jointly with competitors or partners, and almost always within Asia.
Purchasing Kansas City, Missouri-based EyeVerify doesn't fit that mold. Ant operates Alipay, Alibaba's payments system, and already uses EyeVerify technology to scan users' irises to authenticate their identity, Bloomberg News reports. Buying the company outright will allow Ant to use the technology to upgrade its own security systems, and perhaps eventually apply it to a U.S.-targeted product.
While buying an overseas firm may look like foreign expansion, the reality is such a move will have been a long time coming. Despite words to the contrary -- Ma has said he wants half of Alibaba's sales to come from outside China -- there have been few signs either Alibaba, or Baidu or Tencent, actually plan to do much overseas.
To date, most of Ant's offshore activity has been about ensuring merchants accept Alipay, and can therefore serve Chinese shoppers. There's been little indication Ma is willing to take on Amazon.com or Paypal in the U.S., especially given the advantages of a protected domestic market.
But as EyeVerify shows, this strategy doesn't necessarily apply to acquisitions, particularly when purchases can deliver technologies that may be otherwise unavailable.
Now the deal has closed, and with Alibaba flush with cash, expect more transactions. Just don't hold your breath waiting for Ma to plant his flag on U.S. soil.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
EyeVerify has 17 U.S. patents and 15 more pending.
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Tim Culpan in Taipei at firstname.lastname@example.org
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