Plans by Alibaba Group Holding to launch bargain online shopping platform Taobao Deals as a mini-program on Tencent Holdings’ ubiquitous super app WeChat, have apparently hit a snag, according to a source familiar with the matter.

 

Tencent, which runs the world’s largest video games business by revenue and China’s biggest social network, has suspended testing Taobao Deals on WeChat, as there is little substantial progress at the current stage, according to an Alibaba executive who declined to be named. Alibaba, which owns the South China Morning Post, had confirmed four weeks ago that it filed an application to Tencent to open a mini-program on WeChat.

 

Four weeks later, however, there is no sign or timetable from either side that the Taobao Deals mini-program will be available on WeChat.

 

Taobao Deals had created a mini-program, called Jianzhile, and introduced it on WeChat in early February. The service, however, was quickly removed for “mismatch of claimed category and content”.

 

Taobao Deals has an account on ByteDance-owned short video-sharing app Douyin, the Chinese version of TikTok.

 

Tencent and Alibaba did not reply to requests for comment.

 

The proposed collaboration would appear to be an initial step to help appease regulators’ concerns about monopolistic practices in the country’s Internet industry, as both Alibaba and Tencent deal with various antitrust issues.

 

Earlier this month, the State Administration for Market Regulation slapped Hangzhou-based Alibaba with a record fine of 18.2bil yuan in a landmark antitrust case, a precedent-setting move by Beijing to enforce anti-monopoly rules against the country’s Big Tech companies. Alibaba has pledged to obey antitrust rules and to assist regulators in maintaining “market order”.

 

That major e-commerce collaboration would have enabled Taobao Deals to accept transactions that use online payment service WeChat Pay, which is the main rival of Alibaba affiliate Ant Group’s Alipay. Alibaba has long barred the use of WeChat Pay on its Chinese retail platforms, including Tmall and Taobao Marketplace. Transactions on Tencent’s WeChat have also been exclusive to the platform’s own payment service.

 

With about 1.2 billion monthly active users as of Dec 31, the enormous reach of WeChat, operated as Weixin in mainland China, makes it valuable in the country’s vast e-commerce market. The gross merchandise value - a metric of e-commerce sales volume - generated by mini-programs on WeChat doubled in 2020 from 800bil yuan in 2019, according to the social media giant.

 

Such a collaboration between Alibaba and Tencent could help make Taobao Deals more competitive against Pinduoduo, which has already enjoyed huge success on WeChat, across China’s smaller cities and rural areas.

 

Taobao Deals, an app whose popularity expanded in 2020, “may grow even faster if it can launch on WeChat”, said Michael Norris, research manager at Shanghai-based consultancy AgencyChina.

 

Without elaborating, Norris suggested that there could be a “tactical delay or obstruction” by Tencent, which had backed Pinduoduo. Nasdaq-listed Pinduoduo had 788.4 million annual active buyers in 2020, 57 million more than in the previous year, surpassing Alibaba’s 779 million and JD.com’s 471 million.

 

Tencent is the second-largest shareholder of Pinduoduo, with a 15.6% equity stake as of March 31. The Shenzhen-based company has helped boost Pinduoduo’s rapid growth by enabling the app to share links on its WeChat platform.

 

Tencent could initially allow Alibaba’s second-hand product marketplace Xianyu to launch a mini-program on WeChat, according to Norris, since that service is not a direct threat to Pinduoduo. Alibaba applied to launch Xianyu, which means “idle fish” in Chinese, on WeChat last month, but the service was not approved by Tencent.

 

Meanwhile, Hema Jishi - the community group-buying business, with a relatively small user base, under Alibaba’s grocery chain Freshippo - has been available on WeChat since 2020.

 

At present, WeChat can block a mini-program on the grounds that it violates community rules, which cover “external links that entice users to share”. Those include links to sites run by competitors including Alibaba and ByteDance.

 

That discretion, however, has put Tencent under criticism for blocking its competitors’ access to WeChat. ByteDance filed a lawsuit against Tencent in February, accusing the company of violating Chinese antitrust laws by restricting access to content from Douyin on its WeChat and QQ messaging platforms, and abusing its dominant position in the market. ByteDance’s lawsuit, which has started proceedings under the Beijing Intellectual Property Court, is seeking 90mil yuan in compensation. Tencent said at that time that ByteDance’s allegations were untrue and a malicious slander, and that it would countersue, claiming that Beijing-based company had damaged its platform ecosystem and breached its users’ rights.

 

 - SCMP