Google will invest $550 million in Chinese e-commerce company JD.com as part of a strategic partnership, the two companies announced on Monday. The tie-up is seen as a way to combat the dominance of online retailers Alibaba and Amazon across the world.
In a statement, the two companies said they will develop retail solutions in Southeast Asia, the U.S. and Europe. Initially, JD.com plans to make a selection of high-quality products available for sale through Google's price-comparison service Google Shopping in multiple regions.
By combining JD.com's supply chain and logistics expertise with Google's technology strengths, they aim to offer "helpful, personalized and frictionless shopping experiences."
In return for the investment, Google will receive 27 million newly issued JD.com Class A ordinary shares at an issue price of $20.29 per share.
The deal marks the latest collaboration between Google, whose search engine is blocked in China, and a Chinese tech giant. In January, Google agreed to share patents with Tencent Holdings, JD.com's largest shareholder.
It also highlights the threat posed by U.S. e-commerce giant Amazon and its Chinese counterpart, Alibaba Group Holding, as they extend their reach across the world.
JD.com and Alibaba, the two top e-commerce players in China, have taken their rivalry beyond their home turf in recent years, with each investing aggressively in emerging markets such as Southeast Asia.
Meanwhile, Google's dominance in online advertising is being challenged as users increasingly move to Amazon's app, website and smart speakers to look for consumer items.
Some also see the partnership as a way to secure a reliable business partner as trade frictions grows between the U.S. and China. U.S. President Donald Trump recently gave green light for a 25% tariff on $50 billion worth of imports from China. China responded by vowing to introduce tariff measures of the same scale.