Official announcement: Alibaba acquires Kaola for $2 billion and leads investment in NetEase Cloud Music

On September 6, Beijing time, NetEase and Alibaba jointly announced a strategic cooperation, with Alibaba Group acquiring NetEase's cross-border e-commerce platform Kaola for US$2 billion. At the same time, Alibaba participated in NetEase Cloud Music's US$700 million round of financing as the lead investor. As Internet companies that grew up in Hangzhou, the two parties will work more closely together in the future to jointly explore the future of the digital economy era.

It is reported that Koala will maintain independent brand operation, and Liu Peng, general manager of Tmall's import and export business group, will also serve as Koala's CEO.

During the closed-door negotiations on August 20, Ding Lei promised to appease the middle management of NetEase Kaola that layoffs would not occur in the short term.

NetEase Cloud Music received a total of US$700 million in financing from Alibaba, Yunfeng Fund and others. It is reported that this financing is the B2 round of financing for NetEase Cloud Music. After the financing, NetEase still has sole control over NetEase Cloud Music. This is similar to the previously rumored acquisition of NetEase Cloud Music, and is not included in the acquisition of Kaola.

NetEase Cloud Music was officially launched in April 2013. It has achieved sustained and rapid growth over the past six years and has formed differentiated advantages with its playlists, reviews, personalized recommendations, unique community atmosphere, and high-quality original music. Currently, the total number of NetEase Cloud Music users exceeds 800 million, ranking first in China's online music industry. However, the copyright war with Tencent is getting more and more intense.

The sustained and rapid growth under the differentiated path has also made NetEase Cloud Music continue to be favored by the capital market. In April 2017, NetEase Cloud Music completed a round A financing of 750 million yuan. In November 2018, NetEase Cloud Music completed a round B financing of over 600 million US dollars.

Ding Lei, CEO of NetEase, said that he was very pleased to reach a cooperation with Alibaba, which was in line with NetEase's strategic choice in the new era and was conducive to the long-term development of all parties. NetEase hopes that Kaola can continue to provide users with high-quality cross-border e-commerce services within the Alibaba ecosystem. NetEase will continue to promote its focus strategy, concentrate resources in its advantageous areas, and create continuous value for users through continuous innovation. NetEase will also continue to strongly support the development of NetEase Cloud Music, help Chinese original musicians create better works, realize bigger dreams, and provide Chinese users with world-class music services. At the same time, NetEase will continue to contribute to the development of the industry with its independent principles and an open and compatible attitude.

Alibaba Group CEO Zhang Yong said, "We are full of confidence in China's import consumer market. We are also grateful to NetEase for incubating and nurturing an excellent cross-border e-commerce platform. We welcome Koala to join the Alibaba family." Liu Peng, general manager of Tmall's import and export business group, will concurrently serve as CEO of Koala. The Koala brand will continue to operate independently. China's import e-commerce is still in its early stages, and China's import space will continue to expand. In the future, Alibaba will make every effort to give full play to the ecological synergy effect and continue to optimize the consumption experience of imported goods for Chinese consumers. At the same time, we are also very happy to participate in the development of NetEase Cloud Music, and hope that both parties will also have more chemical reactions in the cultural and entertainment sectors in the future.