Deal activity in the messaging app sector is surging, as are valuations. On top of Facebook's recently announced $19B acquisition of WhatsApp, Rakuten, Japan's largest e-commerce company, has agreed to acquire Israeli messaging service Viber for $900M and Softbank is seeking to buy a stake in Line, the leading mobile messaging service in Japan. Much of the action is focused on Asia, with Line (controlled by Korea's Naver) dominant in Japan, Taiwan and Thailand, while Kakao Talk is entrenched in Korea. Meanwhile, Tencent's WeChat, with over 270 million users, is the mobile messaging leader in China. Indonesia is set to be among the countries in which this battle will continue to play out. 

Do you wonder how these companies make money? Here's some insight. 

In the wake of Facebook's 19B acquisition of Whatsapp, Chinese Internet giants Alibaba, Baidu and Tencent are expected to continue seeking acquisition targets to fill holes in their product offerings and capture more smartphone eyeballs in China. Since 2012, the three companies have announced 44 acquisitions valued at $18.7B. Citigroup expects acquisitions by Alibaba, Baidu and Tencent will reach a new record in 2014. Deal activity is likely to remain strong for the foreseeable future. 

Baidu's Q1 2014 sales forecast beat analyst estimates, with revenue in the quarter projected to grow to $1.5B to $1.55B, a 60% increase over last year. Mobile continues to drive Baidu's revenue growth, including as a result of the company's $1.9B acquisition of the 91 Wireless, China's most popular app store, in August 2013. Baidu expects focus on its mobile search, security and location-based applications to reach its revenue targets. To keep pace with Alibaba, Tencent and other competitors, Baidu will explore additional acquisition opportunities in 2014, according to CEO Robin Li. 

Sina Corp. has reportedly engaged Credit Suisse and Goldman Sachs to lead a $500M US IPO for its Sina Weibo microblogging service. In a related development, Alibaba Group Holding, the largest Chinese e-commerce company, is reportedly set to increase its 18% stake in Weibo (purchased last year from Sina for $586M) to 30% if an IPO takes place. Alibaba itself is also said to be considering an IPO in Hong Kong or the US. These are further signs of the intensifying competition among China's Internet giants to attract the rapidly growing number of Chinese using mobile devices to access the Internet. Weibo's main competitor is Tencent Holdings, owner of the popular We Chat instant messaging app.   

Chinese mobile gaming company Chukong plans to raise $150 million in a US IPO. The IPO, reportedly led by Deutsche Bank and Morgan Stanley, is expected to commence in the second half of 2014. Chukong is the maker of Fishing Joy, one of China's most popular mobile games, with more than 200 million users. Chukong's US investors include Northern Light Venture Capital, Steamboat Ventures, Sequoia Capital and GGV Capital.