U.S. Markets closed

There’s an unexpected alliance between Google and two Chinese tech giants

Josh Horwitz
WeChat mascots are displayed inside Tencent office at TIT Creativity Industry Zone in Guangzhou, Guangdong province, China

On Monday (June 18), Google announced it would invest $550 million in JD.com, the Chinese e-commerce company that competes against Alibaba.

The deal comes as the US tech giant revamps its China strategy. The company has had a marginal presence in the country since March 2010, when authorities shut down its search engine for mainland China and later cut off traffic to its consumer-facing services. More recently, Google announced last December it would open an artificial-intelligence research lab in Beijing, and the following month it invested in Chushou, a Chinese mobile game platform.



Yesterday’s investment, coupled with other recent deals, suggests that the company is now forming an alliance of sorts with two major tech companies in China: JD.com and Tencent, the maker of the chat app and payments service WeChat.

Those two have been tightly linked since 2014, when Tencent bought a 15% stake JD.com. Since then, they’ve gone on to co-invest in a number of Chinese companies, among them the retail chain Better Life, the entertainment conglomerate LeEco, and the cinema giant Dalian Wanda Group (paywall).

Recently, a web of deals and partnerships has formed around Google, Tencent, and JD.com (along with a handful of other companies).



For instance, all three invested in Go-Jek, an Indonesian ride-hailing player that competes against Grab in Southeast Asia (and, before it retreated from the region in March, Uber). Tencent and Google also formed a patent-sharing agreement in January.

Meanwhile, all three share partners in the e-commerce wars taking shape in China and the US, which feature traditional retailers partnering with online ones. Taken together the various arrangements suggest a pattern:

  • In January 2016, JD.com purchased the e-commerce arm of Walmart’s China business. Months later, Walmart increased its stake in JD.com to 10.8% (paywall).
  • In August 2017, Google announced a partnership (paywall) with Walmart to offer the retailer’s products on its online shopping site.
  • In January 2018, news surfaced that Tencent planned to invest in French retailer Carrefour. In May, a Carrefour supermarket powered by WeChat’s QR codes and payments opened in Shanghai.
  • In March 2018, Walmart announced it would cease to offer payment services from Alibaba’s Alipay in its stores across western China and would only accept Tencent’s WeChat payments.
  • In June 2018, Google and Carrefour announced they would form a joint venture (paywall).

The three-way alliance dovetails nicely with Walmart’s rivalry with Amazon in the US, and with Tencent and JD.com’s battle against Alibaba in China. Meanwhile, the investments in Indonesia’s Go-Jek could pay off in Southeast Asia, where Amazon and Alibaba are each planning an aggressive expansion.

Ziyi Tang contributed to this post.

 

Sign up for the Quartz Daily Brief, our free daily newsletter with the world’s most important and interesting news.

More stories from Quartz: