Big Tech competition in China will be reshaped by tearing down ‘walled gardens’, a staple of the platform economy

Analysts say competition between Big Tech companies Alibaba, ByteDance and Tencent will change after the MIIT ordered them to stop blocking each other’s links

The precise effect of the mandate will depend on how companies interpret the order and whether they find excuses to keep some of their walls erect

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Douyin, the Chinese version of TikTok, and WeChat are two of the most popular social media platforms in China. Both apps, along with platforms from Alibaba, have been accused of blocking links to rivals, a practice Beijing is trying to stamp out. Photo: AP

Published: 8:00pm, 14 Sep 2021

The way China’s biggest tech titans compete against each other is changing after a Beijing ministry ordered them to stop blocking each other’s links and services, bringing down the “walled gardens” that have come to define the country’s internet economy.

Long shielded by foreign competition from the likes of Google and Facebook, tech companies within China have also sought to protect themselves from domestic rivals by making it harder to reach competing products from within their own apps. Now, however, TikTok owner ByteDance, WeChat owner Tencent Holdings, and Alibaba Group Holding, the owner of the South China Morning Post, have all pledged to comply with a mandate from the Ministry of Industry and Information Technology (MIIT) to end the controversial practice.

While analysts say the move will impact competition within the country, the precise effects will depend on how the order is interpreted.

“We need to wait and see … Different platforms may have different explanations for whether they [need to] fully open up their ecosystems, or they can still keep the wall up under certain scenarios,” said Zhai Wei, executive director of the Competition Law Research Centre at East China University of Political Science and Law in Shanghai.

“Before the meeting, we focused more on trying to use the Anti-Monopoly Law and Anti-Unfair Competition Law to solve the problem,” he added. “Now the MIIT is trying to solve the issue through the development of the whole industry.”

Chinese consumers have grown accustomed to the tech industry’s walled gardens, but it has long been a thorn in the side of start-ups. Under the previous status quo, users could not buy products on Alibaba’s Taobao or Tmall e-commerce platforms with Tencent’s WeChat Pay. Likewise, Alibaba’s platforms are not available on WeChat as mini programs, an increasingly popular way of accessing online services without downloading entirely new apps.

Relative newcomer ByteDance has long railed against these walled gardens, complaining that Tencent platforms WeChat and QQ blocked links to Douyin, the Chinese version of TikTok. ByteDance has sued Tencent over the issue.

The MIIT edict is now set to change the situation. The powerful administrative agency does not handle antitrust cases, a power that belongs to the State Administration for Market Regulation (SAMR), but it holds significant sway over the tech industry.