Tech

Alibaba apps are starting to support Tencent's WeChat Pay. Here's why it's a big deal

Key Points
  • For years, China's major internet platforms have operated as walled gardens, blocking links from rivals or not allowing users to purchase goods using competitors payments products.
  • Regulators are now forcing companies like Tencent and Alibaba to change some of their anti-competitive behavior across their apps.
  • Tencent has started unblocking links to rivals' content on WeChat. And Alibaba is now integrating Tencent's WeChat Pay on some of its apps.

In this article

A WeChat messaging app logo is seen on an smartphone.
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GUANGZHOU, China — For years, China's major internet platforms have operated as walled gardens, blocking links from rivals and not allowing users to purchase goods using competitors payments products.

That's starting to change as regulators force China's technology giants to tear the walls down and change some of their anti-competitive behavior.

Alibaba has started allowing users to purchase items on some of its apps via WeChat Pay, the payments service run by its rival Tencent, the e-commerce giant told CNBC. Alibaba already has its own payment service Alipay, run by its affiliate Ant Group.

Food delivery app Ele.me and video service Youku have been integrating WeChat Pay recently. Alibaba's other apps Shuqi, Damai and Koala, are now also supporting Tencent's payments service.

Alibaba also said it is waiting on Tencent's approval to bring WeChat Pay to its used goods market place Idle Fish, grocery store app Hema and discount shopping service Taobao Deals.

There was no word on when Alibaba would bring WeChat Pay to its two main shopping apps — Taobao and Tmall.

"User experience and transaction security are our guiding priorities as we actively work towards gradually introducing multiple payment methods on our platforms," a Taobao spokesperson said.

An Alibaba spokesperson added the company will "continue to find common ground with our peers in the platform economy to better serve Chinese consumers."

Tencent was not immediately available for comment when contacted by CNBC.

Regulatory crackdown

Alibaba and Tencent are two of China's biggest internet companies that have built dominance through their sprawling services, which often center around their so-called super apps.

Tencent runs China's biggest messaging app WeChat which has over a billon users, while Alibaba's affiliate Ant Group runs Alipay.

Through these apps, users can access a range of services from food delivery to flight and hotel booking services. Without leaving these apps, people can pay for their goods and services.

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But it has also created a situation where, for a long time, rivals would not let each others' services on their respective platforms.

Such practices have come under scrutiny from Chinese regulators which have introduced new rules across a range of areas from data protection to anti-monopoly.

Earlier this month, China's Ministry of Industry and Information Technology (MIIT) told some of the country's biggest internet companies — including Alibaba, Tencent and TikTok owner ByteDance — to stop blocking links to one another's content.

From Sept. 17, Tencent began allowing users to access external links in one-on-one chats. For example, if someone shared a link from Alibaba's Taobao in WeChat, a user would be able to open that without leaving the messaging app. Previously, a user would have to copy that link into the Taobao app.

The integration of WeChat Pay with Alibaba's apps appears to go one step further.

It's unclear if Tencent will look to bring Alipay to any of its services.

But the opening up of these apps could give users more choice and potentially help both Tencent and Alibaba reach some new users for their services.