Google Invests $1M in Chinese Social Networking Company

SILICON VALLEY — Google has invested $1 million in Comsenz, a Chinese provider of social network software. It’s yet another move by Google to gain a foothold in China.

The investment occurred in July as part of Comsenz’s second round of venture funding, and it was recently revealed in a regulatory filing (see p. 39). Rumors about the investment previously pegged Google’s portion at $5 million. The news follows a report that Google is preparing to launch a joint music download venture in China, largely to take on Chinese search engine Baidu.com, which has been beating Google by offering free music.

As for Google’s American competition, Microsoft has a direct presence in China, while Yahoo owns a large stake in Chinese online marketplace Alibaba.com.

Beijing-based Comsenz provides bulletin board and social networking software, as well as hosting services, to Chinese websites. (We don’t have any more details — not surprisingly, the company’s website is in Chinese.)

Comsenz is backed by former Google board member Michael Moritz. Moritz is a non-managing member at Sequoia Capital China, which owns more than 10 percent of the Chinese company. He left Google’s board last May.

Separately, Google revealed it acquired Peakstream, a company that makes it easier to run applications on multiprocessor systems and thus should help Google boost its internal server architecture, for about $20.3 million (see p. 39). That means Peakstream’s investors lost money on the deal. Peakstream soaked up $23 million over two years (our coverage) from venture firms Foundation, Kleiner Perkins — and yes, there’s that connection again — Sequoia Capital. Kleiner and Sequoia, both original investors in Google, each took in about one-fourth of the acquisition proceeds. Kleiner’s John Doerr also sits on the board of Google.

Matt Marshall contributed to this article.