Alibaba and Tencent reportedly plan to open up services to each other

Alibaba and its arch rival Tencent are considering opening up their services to each other, a move that is expected to help spur greater competition and offer more convenience for consumers, according to a report from The Wall Street Journal

Currently, the consumer internet of China is split into two camps built around both Alibaba and Tencent. For example, customers cannot use Tencent’s payment system to buy goods on an Alibaba platform. If both parties open up to each other, among the first steps from Alibaba could include introducing Tencent’s WeChat Pay to Taobao and Tmall.

On the other hand, Tencent could share Alibaba e-commerce listings on its WeChat messaging app, or allow selected Alibaba services to access WeChat users via mini-programs. 

According to the report, both companies are separately working on plans to loosen those curbs. The system could benefit consumers as it offers more convenience, in addition to helping spur greater competition. However, the plan will also mean that the duo will have more insights into each other’s business.

The Chinese government has been regulating the tech giants over the past months and both Tencent and Alibaba have certainly felt the heat. The report said the recent crackdown makes it harder for Tencent and Alibaba to maintain the virtual barriers they have built in recent years. For example, antitrust regulators in China will be blocking Tencent Holdings’ merger of the top two videogame streaming sites, Huya and DouYu. This comes as Tencent fails to produce remedies to meet the State Administration of Market Regulation's (SAMR) requirements on giving up exclusive rights.

Tencent also withdrew its merger application for antitrust review as it was unable to complete a resubmission within 180 days after submitting the application for the first time. The news of the merger of Huya and DouYu emerged last year.

Meanwhile, Alibaba Group was fined US$2.8 billion by Chinese regulators as a result of an anti-monopoly investigation. The regulator said that since 2015, the Group "has abused its dominant position in the market" and imposed a "Choose one out of two" requirement for its merchants. It also claimed that this has prohibited Alibaba's merchants from opening stores or participating in promotional activities on other rival platforms.

The investigation, which began last December, concluded that Alibaba's "choice of two" behaviour "eliminates and restricts competition" in China's eCommerce market and "hinders the free circulation of commodity services and resource elements", the State Administration for Market Regulation said. It added that this also "affects the innovation and development of the platform economy". Alibaba's executive vice chairman Joseph Tsai said in a conference call on 12 April that the group does not plan to appeal, adding that it will operate in accordance with the law and continue to strengthen compliance systems and build on growth through innovation.

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