Yahoo expected to invest in Snapchat

STRATEGY::The Web giant’s tactic of increasing stakes in mobile technology is set to enable the firm to compete more closely with the likes of Facebook and Google

NY TIMES NEWS SERVICE

Sun, Oct 05, 2014 - Page 13

Yahoo Inc, flush with cash from selling a portion of its stake in Alibaba Group Holding Ltd (阿里巴巴) of China, appears ready to bet on what it believes is set to be the next big Internet phenomenon.

The company has held talks to invest in Snapchat, the popular app that allows photographs and messages to self-destruct, people with knowledge on the matter said on Friday.

However, the deal has not yet closed, the people added.

If Yahoo makes the investment, it will join a bevy of other prominent investors, including the venture capital firm Kleiner Perkins Caufield & Byers, that have valued the service at about US$10 billion.

While Yahoo is not expected to invest a huge amount of money in Snapchat, the investment could give it access to the messaging phenomenon and help Yahoo become more relevant to young consumer audiences once more.

It would also give the company a more strategic stake in mobile technology, an area in which Yahoo has long been seen as a laggard compared with competitors like Facebook Inc and Google Inc.

Yahoo has been bolstered by a US$6 billion haul from selling a significant portion of its holdings in Alibaba, the fast-growing Chinese shopping behemoth, that went public last month.

At least half of the proceeds from the sale are to go toward buying back stock, but some of the money could go toward strategic acquisitions and investments.

Talks between Yahoo and Snapchat gained steam late this summer, some of the people briefed on the matter said.

In that vein, Yahoo recently acquired MessageMe, a small image and text messaging startup in San Francisco, according to a person close to the company.

It is yet another in a string of small mobile startup acquisitions for Yahoo, which began soon after Yahoo chief executive Marissa Mayer took the top position in 2012.

Though Snapchat has garnered millions of regular users who send hundreds of millions of photos and videos every day, it has yet to generate any revenue.

The young company is celebrated in Silicon Valley circles, particularly for its popularity among the much-coveted millennial demographic.

Snapchat, which is based in Venice, California, has raised upward of US$160 million in venture capital; last fall, the company spurned a US$3 billion acquisition offer from Facebook.

Snapchat has been experimenting with ways to distribute content on its popular network.

It has worked with musicians, large brands and popular users on its network to figure out different ways to distribute “snaps” — the company’s name for its disappearing messages — that will keep its member base coming back regularly.

This could be where the two companies see eye to eye.

Mayer has repeatedly said that Yahoo is a “digital content company at its core” and has worked to bolster its content offerings.

Representatives for Yahoo and Snapchat declined to comment on the issues, which were reported by the Wall Street Journal.