Can WeChat defend its social media predominance by blocking its competitors?
- The Tencent-owned super app turned eight years old this month amid criticism about its monopolistic behaviour
As WeChat turned eight years old this month, China’s most popular mobile app is facing mounting complaints about its monopolistic behaviour, which has stifled competition in the world’s second largest economy.
The Tencent Holdings-operated super app, which now counts more than 1 billion active users and is known as Weixin on the mainland, has become such an indispensable online platform that internet companies introducing competing social media products use it to reach and sign up potential new subscribers.
On Saturday, WeChat called out rival platforms – including ByteDance-owned news aggregator Jinri Toutiao as well as short video apps Huoshan and Xigua, and NetEase Cloud Music, operated by video games competitor NetEase – for luring its users to share external links through promotions like cash rewards and virtual gifts, which it said has disrupted the platform’s group chats and Moments social sharing function.
WeChat moved to ban such links based on rules “expressly prohibiting external links that entice the users to share”, according to a statement from the social media platform’s management.
The restriction was even applied to ride hailing service Didi Chuxing, in which Tencent has a stake, and e-commerce services provider JD.com, which WeChat also cited for violating its rules. Non-promotional links, however, remained accessible to all WeChat users.
While the ban covered other platforms under Tencent’s vast ecosystem, it sparked criticism of WeChat’s dominance in China, home to the world’s largest internet population and biggest smartphone market.
That criticism has come amid the recent scrutiny of WeChat by government censors. The super app’s content ecosystem, which allows brands, organisations and bloggers to set up public accounts and post articles, audio, photos and videos for their followers, has been one of the targets of a “clean up” amid the tightening of online content by China’s internet watchdog.
“The abuse of market dominance, or monopoly, will damage the rights of the users and affect the healthy development of the industry,” Li Liang, vice-president of Beijing-based ByteDance, wrote on the company’s social media site Wei Toutiao on Sunday, as he compared WeChat’s position to a monopoly of utilities such as water and electricity.
Li’s post followed last week’s move by Tencent to disable the WeChat login for users of ByteDance-owned short video app Douyin, known as TikTok outside China, without any explanation.
Tencent declined to comment on the accusations about WeChat’s monopolistic behaviour.
ByteDance did not offer further observations about the matter. Didi also declined to provide a statement.
NetEase did not immediately respond to an emailed request for comments.
Criticism about WeChat’s anti-competitive stand snowballed earlier this month after it blocked links to three new social media apps – Matong, Duoshan and Liaotianbao – from opening within the platform. Those links were banned for “containing unsafe content and receiving user complaints”, according to Tencent.
Despite being blocked on WeChat, Duoshan achieved 1 million downloads in the first 24 hours of the launch, thanks to the 250 million user base of sister app Douyin, according to Duoshan product manager lead Xu Luran.
“WeChat doesn’t have to see us as a direct rival because we are doing different things,” said Chen Lin, chief executive of ByteDance news aggregation unit Jinri Toutiao, at the Duoshan press conference earlier this month.
Luo Yonghao, founder of Chinese smartphone maker Smartisan and a backer of Kuairu Technology which owns Liaotianbao, addressed the issue directly during the product launch with a tagline that asked: “WeChat, can we chat?”.
Luo, however, said the problem was caused by the business environment in China, rather than by the actions of WeChat or Tencent. “Because of the gap between us and developed countries on anti-monopoly laws and unfair competition, such incidents happen every day,” Luo said at the launch. China had established an anti-monopoly law in 2008.
“Based on the current anti-monopoly law, WeChat’s behaviour of blocking competitors is very unlikely to be deemed illegal,” said Hou Songtao, a partner at the Guangdong Yandao Law Firm.
Hou said the gist of the Chinese anti-monopoly law is that it is illegal for a dominant player in an industry to use its leverage to reduce charges to customers as a means of competing against
“WeChat has been free from day one,” Hou said. “I think what WeChat does shouldn’t be encouraged because it will defeat innovation.”
“The difference between the US and China essentially boils down to their laws,” he said. “China still has not updated the relevant laws to keep pace with the fast-changing business environment.”
The antitrust laws in the West has held internet companies accountable for thwarting rivals. European Union antitrust regulators last year slapped Google with a US$5 billion fine for abusing its market dominance, forcing manufacturers to pre-install its search engine and Chrome browser, and blocking use of rival operating systems to Android. Google filed an appeal to challenge that ruling in October.
In China, the internet industry is dominated by search engine operator Baidu, video games and social media powerhouse Tencent, and e-commerce giant Alibaba Group Holding, which owns the South China Morning Post.
“All Chinese tech giants are like paving roads – Baidu set up tolls to charge passengers, Tencent constructed entertainment stations, Alibaba built shopping malls, and WeChat installed blockades wherever it wanted as a means to establishing its own dense network of roads,” said Xie Pu, founder of tech website Techy Crab.
Xie said WeChat does not have the right to decide on its users’ behalf what kind of content they can and cannot see. “It’s unfair for WeChat to be the judge and a player in the game at the same time.”