Lining up targets?
Alibaba controls about 80 percent of China's e-commerce and, while there is little immediate threat that WeChat or others are making a huge dent, Tencent is gaining momentum in smartphone-based e-commerce.
"In theory, if Alibaba did nothing WeChat could completely take over mobile commerce - that's not really acceptable," said Marc Einstein, a Tokyo-based tech analyst at Frost & Sullivan.
Alibaba is mindful of the competition, bankers said, but unlike Facebook, it's constrained by what it can buy and how it can structure deals - it already has Yahoo and SoftBank as big strategic shareholders.
Analysts and bankers point to two potential acquisition targets for Alibaba. Naver's LINE, a Japanese messenger with 350 million users that is said to be preparing for an initial public offering, and South Korea's KakaoTalk, which would seem a distant and unlikely second choice as Tencent owns a 13.84 percent stake in its owner, Kakao.
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"If you can't build it, buy it," said Frank Yu, a Beijing-based technology investment adviser and CEO of Kwestr, an online social game. "They're going to be on a buying spree, if not already in discussions."
But Facebook's stratospheric valuation of WhatsApp - a basic messaging app rather than a broad social platform with games, finance and e-commerce - has upped the ante and is likely to make any acquisition even more costly.
"The question is whether (WeChat) will drive Alibaba into doing a crazy Facebook-like deal," said a second person familiar with Alibaba's thinking. "The options available to Alibaba are limited if they decide to turn aggressive on acquisitions. They can either buy LINE or bid for KakaoTalk. Those would be desperate moves."
As Tencent makes inroads into Alibaba's e-commerce turf - it this month bought 20 percent of Dianping, China's largest restaurant review and business listing site, and is reported to be in talks with online retailer JD.com to combine their e-commerce businesses - an alternative strategy for Ma may be to swallow defeat and work with Tencent, pushing Alibaba's services through WeChat.
"It's a difficult and emasculating situation," said stratechery.com's Thompson. "The users are on WeChat. The best Alibaba can do is accept that reality and see what it can do to co-opt it."
Alibaba and Tencent declined to comment.