Tencent, the internet company from China valued at over $470 billion, could play a role in the Snapchat’s reboot process which aims to make it more competitive with Facebook and Instagram. This week, the network’s financial report showed Snapchat’s very poor level of success and Snap, its parent company, revealed it is retooling the same app to make it more user friendly. Now Tencent has increased its stake in Snap with the acquiring of 12 percent of the same company for a price of about $2 million. Experts believe it would allow Snap to use its data on the growth of WeChat, the dominant messaging app in China which has over 800 million users on a monthly basis from all corners of the world. The company might allow Snap to use their additional resources, including the game business that has Supercell Company on board, the maker of gigantic mobile game Clash of Clans and Clan Royale.
On the other hand, the investment by Tencent will provide it with a chance to explore opportunities in the corporate domain of the newsfeed technology and games publishing. It would also share a part of financial returns from its growth and monetization alternatives, as a spokesperson from Tencent told Reuters. Tencent became involved with Snap in 2013 but its size in the company was never publicly shared. As a financial backer, it provides a lot of experience from the messaging space in the IT market and the way it evolved WeChat to be much more than a messenger. Today, it is a true Swiss army knife for many social and business activities, including local services, banking, e-commerce and even investment.
Tencent is also home to a long interest in the US tech companies, where it made a range of investments over the years. Its US portfolio includes the game development and publishing company Activision, Tesla and the chat app Kik. Globally, it invested in messaging apps like Kakao in South Korea and India’s Hike. The experience from this investment will likely be very appreciated by Snap as the company looks for ways to recognize trends that are coming to messaging and also find alternatives on ways it can boost Snapchat to compete with Instagram.