Fuelling the investment frenzy is the realisation that the platform with the most users will have by far the biggest returns, according to Taipei-based tech commentator Ben Thompson, who writes at stratechery.com.

"Alibaba, Tencent and Baidu... don't want to miss out or finish a distant second, which is just as bad - so they're investing heavily," he said.

Asked about its investments, an Alibaba spokeswoman said its strategy is focused on increasing users and expanding its products and services. Tencent did not respond to several requests for comment and Baidu declined to comment.

Alibaba founder Jack Ma and Tencent chief Pony Ma (no relation) have a history of one-upmanship in sectors ranging from gaming to microblogs. That rivalry aside, all online firms are looking over each other's shoulders to ensure they don't miss out on the next big thing.

"They have hundreds of people scouring the startup universe in China, India, the United States," said Gary Rieschel, managing partner at Chinese investment firm Qiming Venture Partners.

A lot of the money major companies invest in Chinese startups is spent on building up user numbers via promotions and marketing. In the first quarter of 2014, Tencent said marketing costs jumped 93 percent to 1.9 billion yuan ($306 million), in large part because of subsidies for Didi Dache.

Investing big in a service, however, doesn't guarantee it will succeed. "It's right to question what are the limits of this," said BDA's Clark. "Not all these people can win."