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Alibaba, Tencent move closer to cooperating in user services under Beijing’s antitrust pressure

  • Alibaba flagged the idea of launching a mini app for its Taobao Deals on Tencent’s WeChat, allowing merchants to use WeChat Pay
  • The two internet giants have built their empires via huge investments into various industries such as education, on-demand services and entertainment

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Alibaba Group Holding headquarters in Hangzhou, China, on Saturday, May 8, 2021. Photo: Bloomberg
Jane Zhang

They have been fierce rivals for many years, but China’s two biggest internet platforms may now start breaking down walls instead of building them after the Chinese government doubled down on its efforts to break up tech monopolies.

Talks on interconnecting the services of Alibaba Group Holding, the e-commerce giant that owns the South China Morning Post, and Tencent Holdings, the social media and gaming conglomerate, have been ongoing since March, when Alibaba flagged the idea of launching a mini app for its Taobao Deals on Tencent’s social media platform WeChat, allowing Alibaba merchants to use WeChat Pay, the payment service rival to Alipay.
While little progress has been made in recent months, there are now signs that the time is right for the two giants to join hands given that both companies have been subject to antitrust scrutiny from Beijing. Alibaba and Tencent, along with 31 other China Big Tech firms, signed a “self-discipline” antitrust convention this week to promote competition and to protect user rights.

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This would break down the virtual barriers the two companies have built in recent years to avoid competitors entering their ecosystems. For example, WeChat Pay users cannot pay for purchases on Taobao and Tmall while it is difficult to share links of Alibaba merchants on WeChat, which has over 1 billion daily active users.

Analysts believe the blocking of Alibaba links on WeChat was a key reason for the rapid expansion of e-commerce sites Pinduoduo and Meituan, which are able to access consumers via WeChat.

The Wall Street Journal reported this week, citing sources, that the two Chinese internet giants are “considering moves to gradually open up their services to one another”.

Initial steps from Alibaba could include introducing Tencent’s WeChat Pay to Alibaba’s e-commerce marketplaces, Taobao and Tmall, while Tencent could make it easier to share Alibaba e-commerce listings on its WeChat messaging app, or allow selected Alibaba services to access WeChat users via mini-programs, the newspaper said.

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