Google invests $550 million in China's second-largest ecommerce platform JD.com

The deal is a win-win for both. While Google wants to counter Amazon in product search, JD.com takes on Alibaba in Southeast Asian and global markets. 

Despite facing local regulatory hurdles, global tech behemoths are keen to do business in China as Google’s $550 million investment in JD.com reflects. The search giant announced a strategic partnership with China’s second-largest ecommerce player (after Alibaba) on Monday.

As part of the all-cash deal, Google will own 27 million shares or about 1 percent of JD.com at $20.20 per share. Both the internet biggies will work together to better retail infrastructure in China and other Southeast Asian markets - where Tencent-backed JD.com has been gradually ramping up its presence to counter Alibaba.

Additionally, JD.com will sell in the US and select European markets through Google Shopping, an ad-driven service that lets users search for products and compare prices from across ecommerce platforms. This not only gives JD.com access to an entirely new set of customers, but also allows Google to take the competition to Amazon, which leads in product searches.

Incidentally, both Google and Amazon, along with several other international tech companies, are blocked in China.

In a joint statement to the media, Google and JD.com said,

“Google and JD plan to collaborate on a range of strategic initiatives, including joint development of retail solutions in a range of regions around the world, including Southeast Asia, the US, and Europe. By applying JD’s supply chain and logistics expertise, and Google’s technology strengths, the two companies aim to explore the creation of next-generation retail infrastructure solutions, with the goal of offering helpful, personalised and frictionless shopping experiences.”

Following the announcement, JD.com shares rose 0.4 percent on NASDAQ.

Google has of late reached out to prominent retailers and etailers to counter Amazon, which leads product searches on the internet. In 2017, Google entered into a partnership with Walmart to list tens of thousands of the US retailer’s items on its voice-powered Google Assistant platform, in a bid to counter Amazon Alexa’s dominance in the voice-controlled shopping market.

Closer home, reports suggest that Google is keen to pick up a stake in Amazon-rival Flipkart (now owned 77 percent by Walmart). Analysts at investment research firm Morningstar reckon that Google’s increased reach via retailers would give it more access to consumer data, which it can then use to strengthen the Google Shopping service.