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Alibaba and Tencent weigh openings in ‘walled gardens’ to make services accessible to each other, report says

Written by Brady Ng Published on     2 mins read

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China’s internet sector has long been cleaved into two camps, but that may change soon.

Two of China’s largest tech companies, Alibaba and Tencent, may open their services to each other, the Wall Street Journal reported. The move would represent a significant paradigm shift in how Chinese tech firms operate, breaking down the barriers of their “walled gardens,” where each company’s platforms and features are designed to keep users within the business networks of one enterprise or the other.

Tech companies in China have long been able to shape their users’ behavior and spending patterns by limiting integration of rivals’ services. An example is customers could not use Tencent’s WeChat Pay to make purchases on Alibaba’s Taobao and Tmall e-commerce marketplaces, instead steering users toward using Alipay, a wallet developed by Alibaba’s fintech affiliate, Ant Group.

That may change, particularly given an antitrust crackdown initiated by the State Administration for Market Regulation, or SAMR, which issued a record-setting USD 2.8 billion fine to Alibaba in April for forcing online merchants into exclusivity agreements that barred them from opening stores on competitors’ marketplaces.

The SAMR also blocked a merger between Huya and Douyu, two of China’s most popular video game streaming platforms, that would give Tencent more than 67% voting power in the consolidated entity. It may also instruct Tencent to forfeit music label exclusivity in the company’ audio streaming arm. Tencent was one of 34 companies instructed by the SAMR, the Cyberspace Administration of China, and the State Taxation Administration to “rectify” their anticompetitive business practices.

In June, ByteDance published a lengthy WeChat post in which it said Tencent had been blocking links to content hosted by apps like TikTok sibling Douyin, preventing cross-platform shares onto WeChat and QQ, two popular communications and social media platforms that are operated by Tencent and broadly used in China. The post went viral but was deleted hours after going live.

Read this: China’s cyberspace watchdog is shaking US capital markets

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