Hours after the Chinese government fined Alibaba a record $ 2.8 billion, a veteran internet businessman urged regulators to do something similar to his company’s biggest competitor.
Douyin, its sister Chinese service TikTok, has filed a lawsuit against Tencent, the largest internet company in China, to allow users to share videos on Tencent’s ubiquitous WeChat messaging service.
Meanwhile, Alibaba has requested to create its own apps within WeChat, something Tencent has basically dared to say no.
Lawsuits are rising and sentiment is rising on the Chinese Internet, home to the world’s largest group of Internet users. Beijing made it clear late last year that it was seriously considering limiting the power of the handful of companies that dominate online life in China. Now, Chinese internet companies are bending over to Beijing and trying to portray their competitors instead of correcting their anti-competitive behavior.
If the Chinese government’s antitrust campaign is successful, the country’s consumers will benefit. But the corporate battle royale could end up strengthening the power of the Chinese government, which is already maintaining a tight grip on online content.
This might make the Communist Party, which controls both government and the judiciary, the ultimate arbiter of the industry. The competition will not decide the winners. Beijing will.
The major US tech firms have their own disputes, such as the escalating spat between Facebook and Apple. Sometimes these disputes involve the government, such as Microsoft and Google Sparring in front of Congress. But none of these companies is trying to make the US government the ultimate arbiter of the future of their industry.
The Chinese government has good reason to harness the great power of technology. Companies have built the digital infrastructure that has become essential to normal Chinese life, including shopping, banking, dining and entertainment.
They didn’t get there by just innovating. They also built high walls and wide trenches, making the Chinese internet perhaps the most secluded place in the digital world.
Among the top 10 mobile apps with the most active users in China, Tencent has developed or become a strategic investor in four of them, according to Analysys International, Beijing Internet Data Service Corporation. Three of them are Alibaba, two are from Baidu search engine, and one is Dwayne from ByteDance.
Among the top 30, 14 belong to what Chinese users call Tencent camp. Five are in Alibaba’s camp, four from Baidu, and three from ByteDance. Only four apps do not belong to any of the giants.
“Tencent will be Samsung,” said Hu Ning, a stock investor, on the Weibo social media platform, referring to the South Korean conglomerate that sells everything from computer chips to groceries to insurance. “It does almost everything except for procreation.” (Weibo aligns with Alibaba, which holds about 30% of the company’s capital.)
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With this concentration of power came the abuse of power.
For years, Alibaba has banned merchants who use its services, such as the Taobao online bazaar, from selling their products on other shopping platforms. Tencent’s WeChat app, which has 1 billion active accounts, does not allow users to share links to Taobao products or short Douyin videos. Meituan, the dominant meal delivery app in China, has raised commission rates for restaurants that have refused to sign exclusive deals. The first page of results for search company Baidu is often filled with links to pages that it controls … well, guess who.
The same limits are found in startups. Once founders of startups accept Tencent’s investment, they usually have to agree not to seek investment from Alibaba. vice versa.
The Internet industry is also concentrated in the United States, but not the same as in China. Imagine a world where, if you sell a product on Amazon, you can only buy ads for it on Amazon, not Google.
“Once the platforms accumulate a large number of users and their internet traffic, they can set their own rules,” said a comment in the daily official business. “The netizens fought in vain at first. In the end they got used to it, just like the boiled frog alive.