Alibaba Group and Tencent (the company behind WeChat) are considering removing the barriers between their services, according to reports by The Wall Street Journal.
Sources of the paper suggest that both companies are looking into ways to relax the previous measures that they had introduced to limit competition. The restrictions prevented customers from using the other tech giant’s services on their platform.
As part of the changes, WeChat users could be able to access Alibaba’s services on the platform’s Mini-Programs, or share Alibaba’s e-commerce listings through the app. In return, consumers could be allowed to use WeChat Pay on Alibaba’s platforms.
The move from China’s two largest tech companies is thought to be a response to the tighter stance being taken by Chinese regulators, as evident in the recent crackdown on Didi and overseas listings.
Both Alibaba and Tencent have been subject to this increased scrutiny in the last year. Last week, the State Administration for Market Regulation rejected the planned merger of DouYu and Huya, two livestream gaming companies that Tencent holds a majority of shares in.
Meanwhile, Alibaba’s fintech affiliate, Ant Group, saw its record-breaking $34 billion IPO suspended last November, and there have been few indicators of when the rescheduled listing will take place. Alibaba also received a record 18.2 billion RMB ($2.8 billion) fine due to its ‘choose one of two’ policy, which prevents retailers from selling on other competitor platforms. New anti monopolistic regulations have forbidden such practices in order to encourage more market entrants.
Cooperation between Tencent and Alibaba should spur on competition and create a more convenient experience for consumers. Yet, it’s also a huge risk for both companies as it could result in a greater understanding of each other’s business, which could lead to a reduced profit margin.
The news has gained high readership on Weibo: “#Alibaba and Tencent consider opening up their ecosystems#” (#腾讯阿里考虑互相开放生态系统) has received 160 million views.
“It will be incredible if WeChat and Taobao open up and are connected! The e-commerce industry will change drastically, and many other e-commerce apps will suffer.”A comment from a Weibo user