China

A possible breakthrough in China’s vicious platform wars

Nudged by new rules, arch rivals Alibaba and Tencent may finally be making up.

A possible breakthrough in China’s vicious platform wars

SHENZHEN, CHINA - AUGUST 19: A woman walks outside the headquarters of Tencent on August 19, 2020 in Shenzhen, Guangdong Province of China. (Photo by VCG/VCG via Getty Images)

VCG / Contributor/ Getty Images

Just a little over a month after Alibaba quietly and temporarily launched within WeChat, Jack Ma's ecommerce behemoth is on the cusp of returning to China's largest social media platform.

Bloomberg reported on Tuesday that Alibaba's low-price platform, Taobao Deals, is planning to set up shop on WeChat in the form of a "mini program" (小程序) embedded within WeChat's ecosystem, and has already invited merchants to participate. A screenshot of an agreement between Taobao Deals and merchants widely circulating on the Chinese web indicates sellers would be able to accept payments via WeChat Pay.

If WeChat approves Alibaba's mini program, it will be huge news for both tech giants. The introduction of an Alibaba product into a (once hostile) WeChat ecosystem could mark the beginning of the end of China's vicious platform wars. The move comes as Beijing is clamping down on Big Tech with tighter antitrust regulations. On Monday, Chinese ruler Xi Jinping called for enhanced oversight of the platform economy and "enriching the anti-monopoly regulatory force" at a meeting with the Central Financial and Economic Affairs Commission.

Fed up with cutthroat tactics between tech giants and their mega app ecosystems, Beijing is actively writing new rules to bring the private sector in line. Last November, Beijing issued draft rules aimed at preventing monopolistic behavior by internet companies like Tencent and Alibaba. In December, China's powerful State Administration for Market Regulation launched an antitrust investigation into Alibaba for monopolistic practices like prohibiting vendors from selling on other platforms.

Prior to this week's news, Taobao Deals had made a fleeting appearance on WeChat that got the internet buzzing. In early February, WeChat users noticed that Taobao Deals had quietly launched a mini program within WeChat and even allowed them to use WeChat to pay for goods. "Taobao's 'setting up shop' on WeChat is a big deal for both platforms," one observer said. But within days, the mini program had vanished.

The reason WeChat gave for the removal was ambiguous: The sales categories Taobao's mini program picked didn't match its "operational content." It's unclear whether WeChat removed Taobao's mini program or Taobao yanked the project itself. Tencent, the parent company of WeChat, didn't respond to Protocol's request for comment; Alibaba declined to comment.

Alibaba and Tencent have an acrimonious, often petty rivalry that dates back to 2013, when WeChat saw explosive user growth and Taobao and WeChat blocked content from each other. An Alibaba statement at the time claimed it blocked WeChat links in order to protect Taobao users. Inconvenienced Taobao and WeChat users and businesses alike have long complained that the practices ultimately hurt the interests of both small merchants and customers.

Given the long-running rivalry, Alibaba has lacked a presence on WeChat. By contrast, the use of the mini program , a key WeChat feature launched in 2017, has given a huge edge to Pinduoduo, a latecomer to the ecommerce space that's nevertheless amassed more annual active users than Taobao. Another Tencent-backed ecommerce site and Taobao competitor, JD.com, also thrives as a mini program.

The competition between the two companies has grown fiercer as Alipay and WeChat Pay have established themselves as China's two dominant digital wallets. Taobao doesn't support WeChat Pay, while WeChat doesn't support Alipay. WeChat users are not able to directly access links to items sold on Taobao; to open a Taobao link sent via WeChat, users have to copy and paste the URL in a browser themselves.

Alibaba's not the only one beefing with Tencent. On Feb. 2, ByteDance-owned Douyin filed a lawsuit against Tencent. The complaint alleged that for the past three years, Tencent's WeChat and messaging app QQ have prohibited the sharing of Douyin and other ByteDance content. Douyin said in a statement that WeChat's behavior violated anti-monopoly laws.

This type of behavior is rife in Chinese big tech. On Douyin, users can't buy products linked from a third-party platform during livestreams. Social commerce platform Xiaohongshu started allowing users to link to products from Taobao last year, but a Xiaohongshu influencer told Protocol that linking to items on other sites hurts traffic. To avoid being punished, savvy users won't even mention the word Taobao on Xiaohongshu. Instead, they use a peach emoji (in Chinese, pronounced "táo") to refer to the competing platform.

Legal experts in China believe such behavior will likely be curbed by new regulations. According to finalized anti-monopoly guidelines for the platform economy, released early February, dominant platforms violate antitrust rules if they use technical barriers, algorithms, traffic restrictions or other punitive measures to limit transactions involving competitors.

"The digital economy's boom is due largely to the free flow of data," Zhai Wei, an associate professor at East China University of Political Science and Law who specializes in competition law, told Protocol. "If big tech companies block each other, then the whole digital economy will be divided up. That is not going to do any good for the country or for individuals."

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep Reading Show less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep Reading Show less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins