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 tycoons.
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 incestuous.
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.
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.