UC Browser’s tough lesson from Alibaba

After our previous story on How UC Browser beat Chrome, through being “lite”, you might wonder what the future holds for them. But the future does not seem to be positive from our perspective.

Take the Indonesian market for example: anyone who has visited Jakarta last year would have been wowed by the abundance of advertisements for UC News – a news aggregator launched by UC Browser in April 2016. However, the advertisements are a distant memory.

It was not much of a surprise for UC Web to launch the news aggregator business. As Flipboard and Google News continue to dominate the markets outside of China, Toutiao (a US$20 billion valued news aggregator from China) became well known for its strong user base and the ability to offer customised news display tailored for every user. The retention is high, and this model is now expanding overseas (including through the acquisition of American video platform Flipagram) especially in the emerging markets.

Based on its product (market leader) UC Browser, UCWeb also expanded its UC News overseas to India and Indonesia and claimed to have over 80 million monthly active users in India as of May 2017.

But what they have been over-optimistic about – if not overestimated – is that the digital market sizes of these two markets are still small compared to China (at least for now).

To make it worse, UC Browser was removed from the Google Play Store last November because of “a certain setting of UC Browser is not in line with Google’s policy.” according to a statement from UCWeb. Many believed it was a attack from Google to pick on its ad-blocking feature confronting Google’s core advertisement business. The app went back up after one week, yet the threat of being pulled still exists.

Now UC News seems to be in retreat. While we came across many users refreshing UC News in India’s Himachal Pradesh recently, overall UC News has been dropping in the ranks. Alibaba seems to be losing its patience on this news aggregation business: in October last year, it launched a mobile marketing platform, UC Ads, to step into the advertising business by using its user traffic.

The reason is clear: monetisation takes time, but Alibaba as a group might not have that much patience to wait for profitability. Alibaba already controls Paytm in India, Tokopedia & Lazada in Indonesia – the importance of UC Web is not that high anymore when there are more profitable – or potentially profitable – businesses to focus on.

Secondly, as UC Browser struggles to strike the balance between profitability and user experience, there are problems coming from the inside – the original founders have left and management has been now replaced by Alibaba veterans, causing a significant change to the team’s vibe.

There are many examples of good products that were bought and then ditched as they were not able to turn a profit or contribute to the core business (Vine as an example). Perhaps this teaches us a lesson: when a company does not make money but belongs to a much bigger group, the threat of losing patience with the product will always exist.

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