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Alibaba Buys Stake in Messaging Company Tango

By Oliver VanDervoort
Contributing Writer

China based Alibaba is making a rather large bet on a relative unknown in the instant messaging market. The company has just invested more than $215 million in the free calling and messaging application known as Tango. The investment gives Alibaba a minority ownership stake in the messaging company. The company is leading a new investment round that will see a total of $280 million investment into Tango.

The new investment round has seen Tango expand its total value to more than $1 billion. That kind of value seems to be enough for Alibaba to be comfortable in taking a 20 to 25 percent stake in the firm. Most of the talk about the money has been from people who are close to the situation but want to remain anonymous.

Tango, which is based out of California, won’t admit just how much it is valued at or how much it received in the most recent funding round. The timing of the deal is likely not exactly a coincidence. Japanese e-commerce superpower Rakuten bought a rival to Tango, known as Viber, for $900 million. Meanwhile, American company Facebook (News - Alert) spent more than $19 billion to acquire WhatsApp.

It seems as if some of the biggest companies in the world are all choosing sides while trying to get into the instant messaging market. All of the apps made by Tango, Viber, and WhatApp allow for free messaging in various ways. Because they use data connections in order to send the messages, they pose a serious threat to cellular carriers like Sprint, Verizon (News - Alert), and T-Mobile who make quite a bit of money off of people paying for text messaging services.

These messaging companies are also putting a bit of a dent into social media sites like Facebook and Alibaba. That is why the bigger firms are making sure they own the messaging companies, guaranteeing themselves a cut of the action.