China based internet search provider Baidu has made a strategic investment in Los Angeles based ZestFinance, reports Deal Street Asia. The US company uses machine learning to transform complex data into credit scores. The terms of the investment are undisclosed.

According to a media statement from Baidu, data scientists from both firms will work together to apply ZestFinance’s technology to Baidu’s search, location and payment data to improve credit scoring decisions in China.

“This investment from Baidu will help our mission in the fast growing Chinese credit market. We are thrilled to be turning search data into credit data with Baidu.” comments Dogulas Merrill, CEO of ZestFinance.

Given that mainland China sees a distinct lack of credit scoring systems, this is a crucial gap that needs to be filled as the Chinese economy grows. 

By taking on this initiative, Baidu is not only giving itself a competitive advantage, but also helping to solve an infrastructural problem for China. China’s financial system lacks a centralized formal credit history database, with Beijing and other central governments making efforts to bridge this gap and extend financial services to citizens who are unbanked.

There are a lot of people in China who deserve credit but live in a cash economy without a formal banking system to service them. -Douglas Merrill, CEO of ZestFinance

In markets such as China, and other parts of Asia, consumer credit data is generally unavailable. Baidu’s rich user data will be valuable for loan services and assessing credit risk.

The ZestFinance platform is highly applicable to emerging markets because it accurately underwrites people who lack credit history.

A version of this appeared in Deal Street Asia on July 28. Read the full version here. 

Verizon has finalized its $4.8 billion acquisition of Yahoo Inc, reports The Wall Street Journal. The company is apparently set to announce the deal on Monday morning (US time), finally ending months of speculation.

The acquisition includes Yahoo’s core internet business and real estate, marking a significant fall for Yahoo, once a Silicon Valley pioneer with market capitalization of more than $125 billion at the height of the dot-com boom. Now it will reportedly be bought for less than a fraction of that price.

For New York based Verizon, the deal adds another piece to the digital media and advertising business the company is trying to build. Verizon plans to keep the Yahoo brand.

And why does a mobile telecom provider want to buy the core editorial business of a faded Internet portal? The short answer is advertising. – Fortune

In a nutshell, Verizon is interested in buying Yahoo’s ad and content businesses for the same reason it acquired AOL last year for $4.4 billion. And that is to build the kind of scale that’s necessary to make money from digital advertising on mobile devices, as growth in the traditional telecom business slows.

“Verizon is trying to pivot its business from analog to digital,” analyst Craig Moffett of MoffettNathanson told the Wall Street Journal. “Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.”

Yahoo’s CEO, Marissa Mayer, is unlikely to have a prominent role under Verizon. She stands to make more than $50 million in compensation if terminated as a result of the acquisition.

Verizon has been a front-runner since the bidding of Yahoo began in April this  year, with a market capitalization of approximately $228 billion. Its digital media arm also includes AOL properties, in which Verizon acquired in 2015 for $4.4 billion.

AOL is another company that couldn’t bounce back after the dot-com crash.

Verizon’s initial competition came primarily from private-equity firms such as Bain Capital, Vista Equity Partners and TPG and Advent International Inc. The company is building a portfolio of online content and aiming to monetize it via advertising. Its current assets include Huffington Post and TechCrunch, which was acquired in the AOL deal. The acquisition of Yahoo will bring in millions more views from popular Yahoo sites such as Finance and Sports.

Google and Facebook will account for more than half of the $69 billion US digital ad market this year. Yahoo’s share is expected to be 3.4% and Verizon properties to hold a small 1.8% share of the market.

Yahoo will also need to decide on the fate of Yahoo Japan Corp, majority-owned by Softbank Group Corp. and Alibaba Group Holding Ltd, considered to make up the majority of Yahoo’s $36 billion market value today.

Update: Verizon’s $4.83 billion acquisition of Yahoo has been confirmed by Reuters.

A version of this appeared in The Wall Street Journal on July 24. Read the full version here.

Baidu expands mapping service


Baidu officially launched its travel mapping app, Baidu Map, for outbound Chinese tourists. Baidu Map is available in Mandarin Chinese and Thai. It offers maps of Thailand’s tourist attractions, restaurants and hotels for a combined 17,000 places.

“Thailand is a strategic country as it is the most popular for Chinese travelers,” said Richard Lee, Director of the International Business Development department at Baidu Inc. TAT governor Yuthasak Supasorn comments,

The number of Chinese tourists visiting Thailand is expected to reach 10 million this year, an increase from 8 million in 2015 generating 509 billion baht in revenue, up 35%

Following the surge in mobile internet usage in Southeast Asia, Baidu is adapting its expansion strategy shifting from PC-based to mobile-based services. Using Chinese tourists in Thailand as leverage, Baidu is stepping into Southeast Asia’s promising market.

Baidu Map has more than 500 million active users around the world and global searches on Baidu, the most popular search engine in China, number 10 billion a day.

Mr Lee said Baidu has 7 million monthly active users in Thailand after its inception four years ago and the company has already introduced six local mobile apps in Thailand.

In the longer term, Baidu plans to roll out its mapping service in 18 countries in Asia Pacific by tapping into the growing mapping demand from Chinese tourists traveling overseas.

A version of this appeared in Bangkok Post on June 14. Read the full article here