(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Una Galani
HONG KONG, March 22 (Reuters Breakingviews) - Jack Ma and
Masayoshi Son are on a collision course. The Chinese and
Japanese tycoons have invested in rival e-commerce players in
India through their interlinked flagship companies Alibaba
and SoftBank. A potential merger between
India's Snapdeal and Paytm would resolve the tangle for the
India has less than ten unicorns, or $1 billion-plus
startups, touching everything from ride-hailing to advertising.
Ma, Son, and their affiliates rank among the largest investors
in four of them. Early stage investing creates conflicts
worldwide but this makes the Indian market look particularly
In e-commerce, the pair are now competing directly with each
other. SoftBank has invested more than $600 million into
Snapdeal since 2014. In 2015, Alibaba invested in the company
too. Fast forward to this year: Snapdeal is struggling, and the
Chinese group's focus has changed. It has just ploughed $200
million into Paytm's marketplace, signalling its own intention
to enter the country and take on stronger rivals Amazon
and Flipkart (IPO-FLPK.N).
If Son decided to invest yet more in Indian e-commerce, it
would create more competition for Ma, and potentially weigh on
the value of SoftBank's own near 30 percent stake in Alibaba,
which is currently worth about $78 billion. Admittedly, that
makes India look small but Amazon's pledge to spend $5 billion
in the country underscores how the Asian duo’s investments could
lead to bigger commitments.
Snapdeal denies any sale talks but, ultimately, it looks to
have the weakest hand in India. It is cutting costs and
headcount as it struggles to remain relevant in a fiercely
competitive market, which probably only has room for two or
three successful e-commerce players. A merger with Paytm could
avoid a big face-off between Ma and Son.
On Twitter twitter.com/ugalani
- Indian online marketplace Snapdeal is in talks with
domestic rivals Paytm E-Commerce and Flipkart for a potential
sale, Indian daily business newspaper Mint reported on March 22,
citing people aware of the development.
- The company denied holding talks. "Snapdeal categorically
denies having had any such discussion. The information is
incorrect and without basis. We are making decisive progress in
our journey towards profitability and all our efforts are
aligned in this direction," it said in a statement.
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(Editing by Quentin Webb and Kathy Gao)