No more ‘walled gardens’ . . .
China’s Ministry of Industry and Information Technology (MIIT), the country’s top regulatory body, issued an order last week banning its largest internet companies from blocking each other’s links in their apps. Blocking external links and keeping app users within separate ‘walled gardens’ has been common practice among major apps in China to restrict the outflow of users and user data to maintain a monopolistic edge against competitors. Tencent was among the first and fastest to comply with the new regulatory requirements. Its WeChat app can now open external links in one-to-one chats, allowing users to share content directly from the apps of its competitors Alibaba and ByteDance.
The ‘age of regulations’ for Chinese tech companies . . .
MITI’s new order is the latest move in a slew of regulatory crackdowns in China’s tech sector. Over the past several months, regulators in Beijing have been reining in industries in the private sector they regard as becoming excessively powerful or disrupting economic and social stability. Beijing has been enforcing stricter anti-trust rules to reshape the competitive landscape and curb the market dominance of its internet giants. Earlier this year, Alibaba was slapped with a C$3.6-billion fine for abusing its market power, and food delivery behemoth Meituan was investigated for its alleged monopolistic practice of forcing platform exclusivity on vendors.
The boons and banes . . .
Once phased-in, Beijing’s new anti-blocking regulation could help improve interoperability among different apps. User benefits include greater convenience and consumer power, like earlier regulatory moves such as the new Personal Information Protection Law and the ban on advertisements supported by excessive user-tracking. Alibaba and Tencent are also believed to be discussing the possibility of allowing each other’s mobile payment services on their respective shopping platforms, which has historically been restricted. The regulatory pressure faced by tech giants is already reflected in the stock market, as shares of Tencent and Alibaba both fell significantly last week. It remains to be seen how tech companies will handle short-term losses as they operate in an increasingly tightened environment.
- BNN Bloomberg: Tencent opens WeChat to rivals’ links as China app walls crumble
- Sina: 外链解禁之后，互联网强权时代走向终结
- The Wall Street Journal: Alibaba and Tencent consider opening up their ‘walled gardens’