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Alibaba Looks To Collaborate With Tencent For Joint Services In China

Chinese tech companies Alibaba and Tencent are considering a collaboration that would share each firm’s offerings as Beijing steps up its crackdown on technology companies, The Wall Street Journal reported on Wednesday (July 13).

The crackdown on technology firms has moved to eliminate virtual barriers that companies like Alibaba and Tencent spent years erecting. The edict is considered a major pivot for the two tech rivals. Until now, restrictions have prevented Tencent’s payment protocol from being used to purchase merchandise on Alibaba’s platform.

Both tech firms are independently working on the best ways to curb the mandates, sources told WSJ. The new protocols would make it easier for consumers, but would also mean that the two tech giants would more information about each other’s businesses. 

Initial steps from Alibaba could include introducing Tencent’s WeChat Pay to Alibaba’s eCommerce marketplaces, Taobao and Tmall, sources told WSJ. Tencent could make it easier to share Alibaba eCommerce listings on its WeChat messaging app, or could allow some Alibaba services to access WeChat users via mini-programs that are integrated with the WeChat app, per sources.

China’s State Administration for Market Regulation levied a historic fine of 18.2 billion yuan ($2.8 billion) against Alibaba for a practice known as “er xuan yi,” which requires firms to sell exclusively on a single platform. Alibaba was also ordered to carry out a comprehensive revamp and submit “self-examination compliance reports” in the next three years.

Angela Zhang, an associate professor of law at the University of Hong Kong and author of “Chinese Antitrust Exceptionalism,” said the split in China’s internet was a fundamental competitive problem. “This is the core of the antitrust issue here. Without addressing those problems, it will not fundamentally change the competitive landscape in China’s tech industry,” Zhang said. “Startups have no choice but to join either the Alibaba or Tencent camp, because the two control the so-called super apps that serve as gateways to vast amounts of users.”

Regulators in China earlier this month mandated the removal of all apps associated with Didi due to Didi’s vast depository of user data. Chinese officials pointed to fears that the data could end up being tapped by outside entities. 

Also, Chinese officials moved to levy fines on Didi, Alibaba and Tencent amounting to 500,000 yuan per incident for neglecting to get approval in 22 deals.

TikTok parent ByteDance is now selling the technology that powered its entry into social media and social selling. ByteDance also is looking to go public in the near future.

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