(Bloomberg) – China’s largest e-commerce operator, Alibaba Group Holding Ltd., is planning to offer its fast-growing bargain service on rival Tencent Holdings Ltd.’s WeChat messaging platform in a major concession for regulators seeking to crack down on monopolies in the sphere of the internet, according to people with knowledge of the subject.
Alibaba and Tencent have long excluded each other’s services from their platforms, creating so-called walled gardens in their ecosystems. Now, Alibaba is planning to create a Taobao Deals Lite app on Tencent’s WeChat and has already invited some merchants to participate, according to the people. The sale through the WeChat super-application means that merchants will now be able to accept payments made through WeChat Pay, a service that has been barred from Alibaba markets, people said, asking not to be identified as they were not allowed to discuss em formation.
Tencent will have to approve the listing of all platforms in the app – commonly known as mini programs – and it is unclear whether the company will do so with the Taobao Deals Lite app. More than a billion people use WeChat, which has evolved beyond chat to offer rides, online purchases and payments on its platform. Representatives from Alibaba and Tencent did not immediately respond to requests for comment.
The move is one of the clearest indications that Beijing’s crackdown on monopolies is having an effect. China’s antitrust body has made regulation of internet companies one of its top priorities, cracking down on monopolistic behavior by alliances that squeeze smaller rivals into forced exclusive deals and predatory prices. President Xi Jinping on Monday called for greater oversight of the “platform” economy, signaling that Beijing is preparing to expand its campaign against its tech giants.
Read more: Xi warns against excessive technology in the repression of signs that will increase
Although Alibaba’s roots are mainly focused on online shopping and Tencent’s main businesses are in social media and games, the companies, over the years, have invaded each other’s territories. WeChat ventured into e-commerce in 2017, allowing brands like Starbucks Corp. and WalMart Inc. to sell through their mini apps, a business that last year raised $ 240 billion. Alipaba, an affiliate of Ant Group Co. also competes face-to-face with WeChat Pay, and the two services together account for more than 90% of China’s online payment market.
The influence of companies goes beyond their core businesses. The two giants have created separate feuds in China’s technology industry through their sponsorships, buying up promising startups and investing in others to expand their reach. Only a few companies – TikTok’s owner, ByteDance Ltd. is a notable exception – have thrived without forming an alliance with either of the two giants.
Tencent invested in JD.com Inc. and Pinduoduo Inc., whose e-commerce markets compete with Alibaba, and is also a sponsor of Meituan, which competes with Alibaba’s Ele.me service for food delivery. Meituan was sued last year by a user, who accused the platform of preventing customers from using Alipay. The lawsuit is still ongoing, said Chen Pengfei, a lawyer for the Beijing Shijing Law Firm that represents the plaintiff.
Outside of its flagship shopping platforms, Taobao and Tmall, Alibaba’s business app addresses the growing consumer needs of China’s smaller cities and aims to repel the strong rival Pinduoduo. The monthly average of mobile users of Taobao Deals exceeded 100 million in 2020, Alibaba said in its earnings. In February, local media 36Kr reported that a Taobao Deals mini-program was added to WeChat for a brief period before it was removed.
The twin giants were founded by very different billionaire entrepreneurs: Jack Ma on Alibaba and Tencent’s Pony Ma. Ma from Alibaba was the most visible target of the antitrust campaign after the extravagant businessman criticized regulators before the initial $ 35 billion public offering of the Ant. The list was removed a few days before its debut and antitrust investigators last year started an investigation into Ma’s top e-commerce corporation.
Unlike Jack Ma, his billionaire colleague tended to shun the media and skipped several major technology events for health reasons. Still, he has not escaped the scrutiny of regulators – Tencent has been fined for failing to seek approval in previous deals and people with knowledge of the matter said the company’s fintech business could be the next target for greater oversight by financial regulators.
Read more: Tencent said it will face widespread crackdown on Fintech in China, business
Tencent had previously been accused of barring services from rival technology companies on its platforms. In February, ByteDance sued Tencent, claiming that its rival had violated antitrust laws by blocking access to content from Douyin, TikTok’s Chinese twin brother, on WeChat and QQ. The Shenzhen-based company classified the allegations as unfounded and malicious.
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