Two of the largest Chinese tech platforms, Alibaba and Tencent, are looking at how they can integrate their walled gardens to ensure consumers can use services from both platforms at the same time.
This comes as China continues its push to rein in domestic big tech, especially those who have previously launched initial public offerings in the United States.
Both Alibaba and Tencent are working on this integration separately, according to The Wall Street Journal. The integration could see Tencent’s super app WeChat payment function made available on Alibaba’s Taobao and Tmall marketplace, while Alibaba could host e-commerce listings on WeChat’s mini programs.
Why does this matter?
The Chinese government has been encouraging and supportive of Chinese society becming cashless. It’s hoped digital payment as the default will cut down on corruption and allow more precise tracking of private wealth. So it’s in the interests of Chinese tech players to synchronise their competing systems.
Greg Paull, the co-founder and principal of R3, points out that Alibaba’s $2.8 billion antitrust fine in December did not negate the risk of further regulation.
“This initiative can be seen as proactive action taken by the two online giants to minimize any additional losses that might arise as a result of inaction,” he explains to The Drum.
“Consumers can expect greater convenience. For example, they will no longer be constrained to pay within single apps. We could even see more innovation in this space as emerging companies and start-ups will have greater opportunities to grow.”
How will it affect global tech competition?
Paull says China is a unique market and it is unlikely global platforms like Google and Facebook will voluntarily match the country’s regulations. In fact, he says instead of "walls coming down", walls are getting thicker.
“Facebook just launched Bulletin to compete with Substack. This is a move to consolidate more consumer data within the FB ecosystem, to at least partly mitigate the detrimental effect of Apple's iOS14.5 IDFA tracking restrictions,” explains Paull.
“With newsletters taking off in a big way to compete with traditional media companies, this move only strengthens FB’s wall. For Apple, it has made it clear that email cannot be used as an identifier (even with consent). This locks in consent management within the Apple ecosystem.”
A marketer who spoke to The Drum on the condition of anonymity, agrees with Paull and points out that Alibaba and Tencent’s co-operative plans are a product of Chinese politics: “This is only happening in China because the Chinese government wants it to happen to drive their agenda on the control of money. It is also why the Chinese government was anti-cryptocurrency. The economic strength of China is paramount to the stability of the country.”