DDM reported Thursday that private Chinese e-commerce firm Alibaba Group has acquired an 18 percent stake in online media company Sina Corp‘s microblogging site Weibo.
As far as anyone can tell, this is the company’s first big move into selling advertising on China’s highly competitive social networks.
“Valued at $586 million the deal will give Sina an opportunity to not only gain more advertising revenue,” Daily Deal Media reports, “but also monetize the service and increase its lead over rival Tencent Holdings’ social messaging product, WeChat.”
The deal is anticipated to drive large amounts of web traffic to Alibaba’s Taobao Marketplace, an online shopping site similar to eBay and Amazon.
Weibo is China’s version of Twitter and is used by over 30% of Internet users, or 500 million people, in China.
“(The stake purchase) is as an endorsement from Alibaba … of the value of Sina’s Weibo platform,” Morningstar analyst Dan Su said. “This indicates the tremendous value of the data that is present on the Weibo platform that can be mined for a lot of activities, such as ecommerce.”