« Previous post
Next post »

November 18, 2007

Facebook Offers $85 Million To Acquire Chinese Social Networking Site Zhanzuo.com

Duncan Riley

59 comments »

zhanzuo.jpgFacebook is said to have offered $85 million to acquire Zhanzuo.com, a Chinese social networking site with seven million users.

According to The Times, Jack Zhang, Zhanzuo’s chief executive, and Mark Zuckerberg have been discussing the deal but it has not been accepted yet, with a spokesperson saying that the result of the talks will be disclosed towards the end of the month.

The acquisition would give Facebook a base from which it can tap into the growth in what will soon be the worlds largest online marketplace by user numbers.

Zhanzuo ranks in the Top 250 sites in China according to Alexa, but strangely both Alexa and Compete show a big drop in traffic for the site over July and August. Although Alexa may not be the most accurate metrics source, the massive drop for the site at once might suggest issues with governmental blocking; the site primarily operates on a .com domain as opposed to a .cn (.com’s are more regularly blocked or redirected), and there is no other logical explanation for the massive and immediate drop in traffic. I’d suspect that the site may find it has more problems in the future should it end up owned by Facebook.

Zhanzuo was funded by Sequoia China and Morningside Capital.

Update: as pointed out in the comments, the traffic dip might be related to users heading back to school…that’s one big dip, but I’m willing to accept it as an explanation. Certainly other Chinese companies operate on .com’s without problem, although it would be interesting to see how a social network such as Zhanzuo.com deals with censorship, particularly with 7 million users. Given the previous heated debate over Yahoo and China, it will be even more interesting again to see how Facebook deals with it if the takeover is successful.

Update 2: Facebook is flat out denying this. From Brandee Barker, Facebook’s Director of Communications: “No offer has been made and no acquisition in China is being considered by Facebook. And I don’t know who the spokeperson is that they are referring to in the story. The Times never contacted me or my team to confirm the accuracy of this story.”

CrunchBase Information
Zhanzuo
Facebook
Information provided by CrunchBase
  • Sphere It

This entry was posted on Sunday, November 18th, 2007 at 6:00 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Trackbacks/Pings (Trackback URL)

  1. Facebook Offers $85 Million To Acquire Chinese Social Networking Site Zhanzuo.com  »TechAddress

    November 18th, 2007 at 7:30 pm

  2. Business News Research » Facebook Offers $85 Million To Acquire Chinese Social Networking Site Zhanzuo.com

    November 18th, 2007 at 11:33 pm

  3. Facebook Offers $85 Million To Acquire Chinese Social Networking Site Zhanzuo.com « i-nfotech

    November 19th, 2007 at 5:48 am

  4. Support this story on Stirrdup

    November 19th, 2007 at 6:37 am

  5. Mark Evans » Blog Archive » A Rush into China?

    November 19th, 2007 at 6:37 am

  6. Facebook, Zhanzou.com Acquisition Rumors Are False - The Unofficial Facebook Blog

    November 19th, 2007 at 10:28 am

  7. Dave Liu dot com / musings from the edge » Articles of the Day

    November 27th, 2007 at 5:58 pm

  8. 白鸦的产品设计博客 » Facebook正在和我谈收购

    December 7th, 2007 at 12:31 pm

  9. Facebook Offers $85 Million To Acquire Chinese Social Networking Site Zhanz « WWW.FRANKFORTPOST.ORG

    December 15th, 2007 at 3:40 pm

  10. $anchor$basketball Betting,final Four,final Four Betting,final Four Gambling,final Four Sports Book,final Four Sportsbook,march Madness,march Madness Betting,march Madness Gambling,march Madness Sports Book,march Madness Sportsbook,ncaa,ncaa Betting,ncaa

    March 11th, 2008 at 5:08 am

  11. November 20, 2007 | TechTV Update

    April 1st, 2008 at 10:05 am

Comments

RSS feed for comments on this post.

  1. exapted

    November 18th, 2007 at 6:05 pm

    Interesting news. Thanks.

    “Although Alexa may not be the most accurate metrics source, the massive drop for the site at once might suggest issues with governmental blocking; the site primarily operates on a .com domain as opposed to a .cn, and there is no other logical explanation for the massive and immediate drop in traffic.”

    Not a cogent argument.

  2. Doron Vermaat

    November 18th, 2007 at 6:09 pm

    Duncan, you’ve made a lil typo in the headline. acquire.

  3. exapted

    November 18th, 2007 at 6:18 pm

    [20:11:43] exapted says:
    http://www.zhanzuo.com
    [20:11:54] Someone In China says:
    whats that
    [20:12:01] exapted says:
    social network
    [20:12:09] exapted says:
    Facebook is trying to buy them
    [20:12:49] Someone In China says:
    it looks silly to me
    [20:12:54] Someone In China says:
    why they wanna buy it
    [20:13:01] exapted says:
    to get into the China market
    [20:13:26] exapted says:
    that site has 7 million users
    [20:13:36] Someone In China says:
    when there are more chinese using facebook?
    [20:13:46] Someone In China says:
    woohoo
    [20:14:06] Someone In China says:
    thats a website for college students
    [20:14:28] exapted says:
    is it ?
    [20:14:41] Someone In China says:
    yep
    [20:14:56] Someone In China says:
    just like what facebook was a year ago i guess

  4. exapted

    November 18th, 2007 at 6:20 pm

    Maybe from July to August, College students aren’t online as much.

    Lets not jump to the conclusion that the Chinese gov wants to block all .com sites. Please. No more of that.

  5. Duncan Riley

    November 18th, 2007 at 6:26 pm

    exapted
    .com’s get blocked or redirected to .cn sites, ask Google :-)

  6. Akash

    November 18th, 2007 at 6:26 pm

    Compete.com stats are U.S.

  7. Duncan Riley

    November 18th, 2007 at 6:28 pm

    Yes Akash
    I know, but if I’d quoted Alexa alone I would have had 10 people already commenting that I shouldn’t be using Alexa…it’s balance even if it’s crap out of the US

  8. exapted

    November 18th, 2007 at 6:28 pm

    If you expand the Alexa view to 1 year, you can see that the traffic increases during the summer.

    So actually, students must get online less during the academic year than they do during the summer.

    The fact that it is a college social networking site makes perfect sense. Brilliant idea for Facebook to buy them.

  9. dt

    November 18th, 2007 at 6:29 pm

    There is a facebook clone in China called xiaonei (means ‘in school/on campus’ literally), and it seems to be pretty big too. I found some old friends on that one.

  10. exapted

    November 18th, 2007 at 6:29 pm

    Duncan:

    Alibaba.com, Taobao.com, Alipay.com - they don’t get blocked.

    Great post. Don’t get me wrong. But a better explanation for the drop in traffic is that, actually, the traffic increases during the summer then drops off again as the school year starts.

  11. DF

    November 18th, 2007 at 6:30 pm

    @Duncan

    I believe it’s not about .com/.cn per se.

    Zhanzuo was involved in the cheating scandal using the url redirect technique etc. both Compete and Alexa change their algorithms around that period.

    If you look at the footer of Zhanzuo.com, they’re registered with ICP/IP, so it’s very likely they’re operating within china, where officials can just “take the servers offline” in case of “emergency”.

    anyway, Facebook have been recruiting ppl on internationalization for ages, I think they just get bored of waiting and decide “buying” local developers are more straightforward.

  12. Duncan Riley

    November 18th, 2007 at 6:32 pm

    expated
    maybe, but that’s a huge drop. I find it hard to believe that a drop that size is school related alone, but I’m willing to accept the argument.

  13. EH

    November 18th, 2007 at 6:38 pm

    It also gets rid of some burgeoning competition in a future battlefield.

  14. my1510

    November 18th, 2007 at 6:48 pm

    I heard that the big drop is related to Alexa cheating problem, which is popular in mainland china these days.

  15. rick

    November 18th, 2007 at 6:56 pm

    14, my1510, it seems dishonesty in business is almost universal in mainland china, then.

  16. George

    November 18th, 2007 at 7:13 pm

    @5

    “.com’s get blocked or redirected to .cn sites, ask Google”

    Isn’t this the same as saying “every country gets invaded by the US, ask Iraq.” I’d expect a little bit more logical thinking from a TC author.

  17. George

    November 18th, 2007 at 7:24 pm

    @Duncan

    If you want to seriously cover China, you need to find some local sources to talk to before you write anything. If you had done so, you would have found out that many other sites saw huge drop in REPORTED traffic at exactly the same time as zhanzuo.com did. And there is a very logical explanation for that, as someone has pointed out in earlier comments.

  18. 113.com

    November 18th, 2007 at 7:31 pm

    $85M for 7M users, that’s pretty cheap.. (compared to facebook’s own valuation).. though, that’s would consume some 1/3 of the cash level of facebook, if on an all-cash deal..

    And they really shouldn’t sell, cheapens the internet properties in China!
    Cheers, /ac.

  19. Wes

    November 18th, 2007 at 7:41 pm

    I also think there must be a logical decision to the drop in traffic than just blocking of .com sites. If .com sites are blocked why is it that people in China are still able to reach my sites all the time esp. when I don’t have a .cn equivalent to redirect to.

  20. www.CARversation.com

    November 18th, 2007 at 8:12 pm

    damn thats it, i think it should be sold for a lot more considering the potential of billions of users in CHINA, i think they should be selling for at least 10 billion.

  21. 113.com

    November 18th, 2007 at 8:14 pm

    Re 17., and that aspect, Alexa is pretty much useless for anything microscopic, particularly for China sites.. how many people in China install this Alexa toolbar stuff..

    There used to be a site in HK (www.newsgroup.hk, now .la) that for a few years circa 2002-2005 or so, requires that all their users install the Alexa toolbar to view their site’s premium (actually not so premium) content… and as a result, the site became #1 in the big5 chinese alexa category, and even makes into Mary Meeker’s china internet annual presentation powerpoints..

    Later, the site converts to fee-based (before adsense came), and relaxed the requirement for users to install the alexa toolbar.. their alexa ranking dropped..

    Later, when adsense came, they barely talk about alexa toolbar installation..

    Of cos, that’s not to explain a *sudden* alexa drop, but the point being, alexa is perceived much less trustworthy, and it gives no reason for any big rise or big drops.

    And, since newsgroup.hk/.la no longer requires the alexa toolbar installation to view their content, their alexa ranking drop — but that’s not the point i want to make; the point being, over a few months, a lot of HK site’s alexa rankings drop… ;-)

    Rgds,
    /ac.

  22. 113.com

    November 18th, 2007 at 8:16 pm

    Re 20., 10 billion?.. probably not., at least 10 trillion!!!

  23. rod / techwatching.com

    November 18th, 2007 at 8:27 pm

    Looks like Facebook’s spending its MS play money as quickly as it can. And why not? They’ve still got 99% to sell off.

  24. gaston monescu

    November 18th, 2007 at 8:58 pm

    weird.
    black swan status

  25. Zhanzuo user

    November 18th, 2007 at 9:07 pm

    Answer is: Zhanzuo was cheating Alexa’s traffic, and it would be stupid to buy such a site. 7 million? no way…these guys don’t know how to do Internet in China, they once use a PR company to do a promotion in Shanghai, and reported to have get 10k users in one day, but then found out the real new registration from the promotion is “0″. The 85 million price just sounds silly to me, as silly as the initial investor of Zhanzuo - Sequoia China, dumb investors should get punished…

  26. Steve Ballmer

    November 18th, 2007 at 9:37 pm

    Chinese get “social” too, they are just more careful what they say and about who.

  27. Yes, silly

    November 18th, 2007 at 9:41 pm

    Duncan, you believe an explanation as stupid as this? Students heading back to school could cut the traffic to 1/20?? It’s supposed to be used on campus, during semesters. And don’t blame China goverment for everything. It just makes me question the poster’s intellegence.

    This looks like a game Zhanzuo plays to find an exit, or the investor trying to cover their ass. I don’t know whether we should be happy or sad watching US big guys buying these shitty sites

  28. aw

    November 18th, 2007 at 10:17 pm

    I don’ believe this news.

  29. underone

    November 18th, 2007 at 10:56 pm

    AW
    我也不太相信

  30. David

    November 18th, 2007 at 11:33 pm

    It is so interesting to hear about this. Why is Facebook not interested in Xiaonei.com where more and more colleges are being added into the social graph? it’s my first time to hear about this site. the Homage looks pretty cool but the once you register (no verification in any form if I am or not a student, i can be in any uni network), it looks just like many other social networking sites in China. The only difference is the theme is on reserving seats (which is an interesting angle to look at it. Hats off to the idea on the theme).

  31. Tom

    November 18th, 2007 at 11:43 pm

    I think ive realized that no matter what stories you post here some people always have to bitch about it. Whether its “too many facebook stories” or people saying “There Must not be any news today”. Whatever the story is ther e is something. I think some people need to smoke a blunt and chill out a little.

  32. MrChina

    November 19th, 2007 at 1:39 am

    Roughly 50% of Chinese internet users accesses the net thru a shared computer. This is especially true for college students.

    The Unis here are filled with people from all over China, many of them go home to their families during the summer. It’s very likely that they don’t have internet access during the summer.

    The government has no issues with Zhanzhou. Your identity is “confirmed” in a certain way, it’s very hard to be anonymous on Zhanzhou. They’ve got local recruiters/promoters for the site working on a volunteer-basis on all campuses.

  33. POKI

    November 19th, 2007 at 1:48 am

    I think that facebook will only buy yeejee.com network. zhanzuo.com network he may not be suitable for facebook.

  34. Giordano

    November 19th, 2007 at 1:54 am

    Has anyone from Techcrunch ever been to China?

    Looks to me that there´s 0 knowledge of the Chinese market there. If you want to cover it seriously, get local sources. Otherwise, you´ll just make us all cringe every time you write on the country.

  35. robby

    November 19th, 2007 at 2:24 am

    zhangfan tell lies！7 million users？no such many users！go and have some Survies，no more than 700 thousands。

  36. Sherman SO

    November 19th, 2007 at 2:25 am

    It started from a rumour reported by the Chinese press in late October. Facebook was rumoured to offer US$85 million for Zhanzuo, but Zhanzuo has declined the offer.

    What is confirmed (by me) Facebook is indeed shopping in China. It intends to buy Tianwang.com, a search engine and a P2P download site for over US$ 10 million. The negotiation of the started 20 days ago and will not concluded in the next one and half month, said chief operating officer of Tianwang. Just talk to the guy.

  37. Sherman SO

    November 19th, 2007 at 2:31 am

    Another note: Zhanzuo’s big dropped in Alexa over July and August is because Alexa reset traffic counters to zero for several Chinese websites for fraudulent traffic, including college student community site Zhanzuo.com.

    read this: http://www.pacificepoch.com/ne.....rchcolor=1

  38. sean liu

    November 19th, 2007 at 3:00 am

    yahoo, ebay, msn, google, myspace are all not operating well in China, partly by political issue, mostly by misunderstanding of Chinese user status.

    When I back to my hometown, a middle city with more than 5m people, almost all neighbours and relatives ask me for help just to teach them to use email, or reinstall virus broken PC. Not a joke :-)

    In China, most college students spend most of their time on internet games which is involving to a big serious social issue.

    And in China tradition, social relative is not a good thing, cause most people incline to use the social relative to ask for help (to do bad thing, eg. bribery) , and people are shy to express themselves by such social graph… I feel it is hard to describe this point.

    Although things are changing (towards western country), especially in big city, I am afraid it is still not a proper time for a site, like facebook to become popular.

    - a Chinese IT observator

  39. I Am Not Posting To Spam My Blog

    November 19th, 2007 at 3:12 am

    So how much money does it make?

    Wait, hang on.

    *bangs self over head with saucepan*

    Sorry, don’t know what came over me. Of course it’s a good deal. Facebook is valued at $278 per user (15bn / 43m) so at $12 per user this is pretty cheap. Even if the size of userbase is totally irrelevant unless you can monetise them profitably in order to secure a rate of return on your investment that exceeds… argh!

    *saucepan*

    Web 2.0! Emerging market! Disruptive technology! Synergy! eGlasnost! Read my blog!

  40. tspoonfr

    November 19th, 2007 at 3:25 am

    http://tspoonfr.blogspot.com

  41. LocalSources

    November 19th, 2007 at 5:47 am

    Hey Guys

    I have a media production company with an office in Shanghai - we do a lot of multi-media / internet campaign projects and as a result, have quite of bit of talent capital in the tech world there.

    If TC would like to periodically consult with / hire on a local source in the China tech scene, feel free to email me. Cheers.

  42. maths

    November 19th, 2007 at 5:58 am

    Techcrunch really needs to get proper Chinese sources before it shoots off its China stories with random conclusions.
    It was already reported here in China a couple of months ago that Zhanzuo was one of the sites that Alexa reset the traffic counters to zero for gaming their traffic - hence the likely traffic drop in Jul and Aug. This is a huge problem in China with regards to Alexa rankings as numerous “high profile” sites resort to this though Alexa occasionally cuts them down to size.

  43. Chechu Lasheras

    November 19th, 2007 at 9:56 am

    Is facebook going shopping? it looks like chineese market it is very interesting. what about spanish speaking market? should we expect a new acquisition?

  44. Dave Nofmeister

    November 19th, 2007 at 2:11 pm

    I think that China is only the first step for facebook. I think we’ll see a shopping spree out of this.

  45. David

    November 19th, 2007 at 6:22 pm

    In order to understand the Chinese Internet users, you’ve gotta spend time in China and get a sense of it. I am not a typical native Chinese Internet users. My friends are… they do things very differently on the Internet. This is why I am back in China, trying to figure out. =)

  46. xddxz

    November 19th, 2007 at 9:13 pm

    It’s not true . The website in China reported that is not true.

    The latest news :http://it.hexun.com/2007-11-20/101530405.html and http://tech.sina.com.cn/i/2007.....1480.shtml

  47. C.ROSE

    November 20th, 2007 at 5:54 am

    WAT IS THIS WEBSITE ALL ABOUT IS IT COMPETING WITH MYSPACE OR SOMETHING WAT IS THIS SITE REALLY ABOUT???

  48. bil kazan

    November 20th, 2007 at 6:12 am

    It’s not true . The website in China reported that is not true.

« Previous post
Next post »