Alibaba reportedly investing in Sina Weibo

Local reports say Chinese e-commerce giant's plans to buy a stake in Sina Weibo will put the microblogging service at a valuation of US$2 billion to US$3 billion.

Chinese e-commerce giant Alibaba Group reportedly plans to invest in microblogging service, Sina Weibo, which will bump up the latter's valuation to the tune of US$2 billion to US$3 billion .

A China Business News report on Monday said Alibaba will buy a 15 to 20 percent stake. While both companies had not responded to the rumor, an unnamed source from Sina's middle management told the newspaper the two companies had been discussing the investment on many occasions.

When contacted by ZDNet Asia, an Alibaba spokesperson declined to comment on the report, saying: "As a matter of company policy, we do not comment on rumors or speculation."

The Chinese newspaper speculated Alibaba's investment in Weibo signifies social networking services will be key to its future investments. In 2009, Alibaba had set up an internal social network for Taobao buyers and sellers, but the service did not pick up due to competition from other social networks even after many revamps, China Business News said.

Alibaba in December 2011 also tested a social network of its own. The mobile-focused social network was officially launched in July 2012 on the Apple iOS and Google Android platforms. One of the features of the app is a "Burn after reading" function which will erase a message when it is read by the recipient.

A China Business News report last Saturday said Alibaba's investment will not involve Sina Weibo's parent company Sina. The microblogging service since 2011 has been operating under the name of an independant company, "Beijing Weimeng Chuangke Wangluo Jisu", it said.

Its parent company last week reported a third-quarter profit of US$9.9 million . Sina said it was "pleased with the initial results of Weibo monetization, as advertising revenues doubled from the previous quarter".