Microsoft (Nasdaq: MSFT) has accepted Renren's (NYSE: RENN) friend request.
The Chinese social networker has announced that it is partnering with MSN China to integrate their social networking services platforms. The pair will share a wide range of applications and services like unified logins and content synchronization. The deal will benefit both companies as it strengthens each others' network effects.
Microsoft has been aggressively trying to break into the Chinese dot-com arena, as evidenced by its numerous partnerships with leading Chinese dot-commies.
This agreement comes after a separate one of Mr. Softy's pushes into the China's booming Internet market last month when it paired up with China's top search engine Baidu (Nasdaq: BIDU) to have Bing deliver English-based searches. The deal with Renren may also sound familiar because MSN China had previously also partnered with SINA (Nasdaq: SINA) in a very similar integration arrangement late last year.
Renren has been growing quickly, while Facebook has been banned in China since 2009. Activated users increased by 28% from 96.8 million to 124.2 million over the past year. The company also recently launched a professional and business social networking site, jingwei.com, which is similar to LinkedIn (NYSE: LNKD). With 480 million Internet users in China, there's plenty of room for additional users.
Getting cozy with Microsoft validates Renren's path to becoming and retaining top-dog status in an overlap of two red-hot sectors: the Chinese Internet revolution and social networking. Investors initially showed their approval of the news, bidding shares up as much as 11% yesterday before calming down and ending with a 1% gain. I happen to be in the camp that thinks Renren's valuation is a little too high right now, but I like where the underlying business is headed. Add it to your Watchlist so you can know if the time comes when you should pick up shares.
