Thursday, 2024 July 18

Major tech companies in China unbrick walled gardens to integrate rival payment services

For years, China’s largest internet companies have been blocking links to each other’s platforms. Two rival conglomerates, Tencent and Alibaba, both built barriers around their ecosystems, forming walled gardens. Links to Taobao, a marketplace operated by Alibaba, could not be accessed on WeChat, Tencent’s popular super app. Similarly, WeChat Pay couldn’t be used in Alibaba’s apps as a payment method.

That is changing. Earlier in the month, regulators ordered companies to perform “self-rectification” measures and dissolve external blocking policies. China’s Ministry of Industry and Information Technology (MIIT) told the biggest tech companies, including Alibaba, Tencent, and ByteDance, that they can no longer block links posted by users that direct traffic to rival platforms. MIIT said the blocks were measures that disrupted market order, created unfair competition, and infringed upon the rights and data security of users.

As a result, tech firms are gradually tearing down their walls. Alibaba has started to integrate WeChat Pay into a number of its e-commerce platforms.

Alibaba’s ecosystem is vast. It encapsulates delivery service, video service Youku, entertainment ticketing platform Damai, cross-border import retail e-commerce business Kaola, and e-book app Shuqi—all of which now include WeChat Pay as a payment option alongside Alipay, which is operated by Alibaba fintech affiliate Ant Group.

Meanwhile, some of Alibaba’s other platforms await Tencent’s approval for integration. These include consumer bargain marketplace Taobao Deals, secondhand goods marketplace Idle Fish (Xianyu), and grocery chain Freshippo (Hema), according to a spokesperson of Alibaba Group.

It’s unclear whether Alibaba will look to bring WeChat Pay to its largest marketplaces, Taobao and Tmall. Alibaba told KrASIA that Taobao and Tmall are making preparations for technical changes so that the platforms will gradually link up with multiple payment methods.

Tencent has also started to unblock external links on WeChat so that users can be directed to listings on Taobao and videos on Douyin, TikTok’s sibling app developed by ByteDance. At the moment, this is only available in direct messages. It is not available on Moments, which resembles Facebook’s News Feed.

Meanwhile, Tencent is developing functions for users to choose whether they would like to enable external link functions in group chats and the Moments feed, the company said in a statement published on its WeChat official account last week. It has not indicated whether it will fold Alipay into its services.

For now, the users of many platforms are taking advantage of an improved experience.

Read this: TikTok sibling skewers Tencent in viral, deleted WeChat post

Mengyuan Ge
Mengyuan Ge
Mengyuan Ge is a passionate tech reporter of 36Kr Global in Beijing. She covers market trends, start-ups as well as big-techs in China.

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