Alibaba Group today announced the long-rumored investment in Sina Weibo, the microblogging service under Sina Corp., taking an 18% stake for $586 million. Hence Sina Weibo is valued at approximately $3.26 billion — the market cap of Sina as a whole, including an online news service and Weibo, was about $3.33 billion before the announcement. Alibaba Group is also granted  the option to increase its stake in Sina Weibo to 30% at an unspecified time in the future.

The two parties also plan to cooperate on data, online payments, online marketing and user account connectivity, and explore potential in social e-commerce, according to Alibaba’s statement.

Sina Weibo announced 500 million registered users in the past February, with 47 million daily active users, and has rolled out a plenty of advertising products to monetize the leading microblogging service in China.

It booked $66 million in revenue in 2012, with 77% from advertising and 23% from value-added services including gaming and membership subscriptions. The income was far from satisfying to Sina management and investors. From early this year, more obtrusive ads like those mixed in timeline were added.

One week ago, Sina Weibo announced partnership with Alibaba’s Taobao to feature contextual e-commerce ads on Weibo. It ‘s a win-win deal that Taobao can leverage the traffic and user behaviors to get more orders and Sina Weibo can receive commissions. Also Sina Weibo and Alibaba’s e-commerce sites are complementary: it was found that 3% of users would visit Sina Weibo immediately after visiting Taobao and 3.2% of users do the exact opposite (in Chinese). Data also show that 8.2% of short URLs shared on Sina Weibo in 2012 were from Taobao; when it comes to click-through rate, Taobao accounts for 7.6% and Tmall, Taobao’s twin sister as a B2C platform, accounts for 0.5%.

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Tracey Xiang is Beijing, China-based tech writer. Reach her at

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