Alibaba invests in Meizu to promotes own operating system

Chinese e-commerce giant Alibaba on Monday announced it had bought a 590 million U.S. dollar stake in smartphone maker Meizu, a clear signal that the online retailer is seeking to promote its own operating system.

The investment will see Alibaba's self-developed Yun Operating System (YunOS) installed into Meizu handsets.

Mobile transaction accounted for more than 40 percent of transactions from Alibaba's retail business in the fourth quarter last year.

Alibaba declined to reveal the stake it will now hold in Meizu but added that the investment was the most substantial following its record-breaking initial public offering (IPO) on the New York Stock Exchange last year.

Alibaba has gone head-to-head with JD.com and other online retailers for market share in the mobile ecosystem, which has seen it implanting its online marketplaces Taobao and Tmall into mobile browsers and TV setboxes.

JD.com sold a 15 percent stake to Tencent last year in hopes of leveraging the 500-million user base of Tencent's instant messaging app WeChat to boost its presence in mobile shopping.

This investment announcement underscores Alibaba's growing ambition to extend its influence in online shopping to software and devices.

More than 85 percent of China's 649 million netizens accessed the Internet via some form of smart device, the China Internet Network Information Center (CNNIC) said.

Alibaba has in recent years been promoting its own operating system with its shopping apps Taobao and Tmall and payment service Alipay, among its other offerings.

Prior to the investment, Meizu had released its MX4 smartphone, which runs on a customized version of Alibaba's YunOS.

So far YunOS's market share is negligible, as Apple's iOS and Google's Android have a combined market share of more than 90 percent.

Yet Alibaba said in a Monday press release that with this investment Meizu was now an important part of Alibaba's mobile ecosystem and would function as a chief promoter of the operating system, just as Google uses Nexus devices.

By offering a stake to Alibaba, Meizu will gain support in e-commerce, mobile Internet and operating systems while Alibaba's online marketplaces will sell its devices.

"The investment in Meizu represents a significant expansion of the Alibaba Group ecosystem and an important step in our overall mobile strategy, as we strive to bring users a wider array of mobile offerings and experiences," said Alibaba's chief technology officer Wang Jian on Monday.

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