Wallstreetcn
2024.02.23 07:20
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Finally, Taobao now accepts WeChat Pay.

Break down barriers.


Author | Liu Baodan

Editor | Zhou Zhiyu

In the business world, there are no eternal enemies. Faced with the aggressive challenges from Pinduoduo and ByteDance, the two internet giants, BABA-SWR and TENCENT, who once built barriers against each other, are now joining hands and cooperating in more fields.

Following the breakthrough in the advertising business, the payment gateway of BABA-SWR's e-commerce business has also opened its doors to TENCENT.

Recently, many users found a new payment option, WeChat Pay, in addition to Alipay when checking out on Taobao. Customer service responded that this is a feature under testing, only open to some users for now. The full release will depend on the page display.

This news quickly spread on social media and became a hot topic. As of February 22nd, the Weibo post about "Taobao orders can now be paid directly with WeChat" has reached a staggering 160 million reads, ranking as high as fifth on the hot search list. Some netizens expressed that this change should have happened earlier, making it more convenient without the need to transfer money between WeChat and bank accounts. Taotian Group has not commented on the opening of the payment gateway to WeChat.

This is a landmark event in the internet industry, indicating that BABA-SWR and TENCENT have not only ended their opposition but also deepened their cooperation, extending from traffic to core business, entering a new phase of collaboration.

There were signs of Taobao opening the payment gateway. At the end of last year, Taobao had already tested opening WeChat Pay, but at that time, users needed to save the QR code for payment, which was cumbersome. Now, users can directly jump to payment while shopping, aligning the user experience of WeChat Pay with Alipay.

Currently, the gradual integration of WeChat Pay into Taobao has limited impact on Taobao and Alipay's business itself.

Shen Meng, a director at Xiangsong Capital, believes that Alipay itself is quite mature, and the choice of payment method will depend more on consumer habits rather than the platform itself, with limited disruptive impact. In addition, as two highly used applications, the overlap between WeChat Pay and Alipay users is quite high and will not bring more incremental demand to Taobao.

Turning enemies into friends after many years is not easy for BABA-SWR and TENCENT.

As internet giants, BABA-SWR leads in e-commerce, while TENCENT dominates in social media. Over the years, they have built vast ecosystems under BABA-SWR and TENCENT, covering almost half of the internet industry. They have also attempted to seize each other's core tracks and formed direct competition in areas such as video, cloud computing, and payment.

A clear example is during the years when WeChat and Taobao were "isolated," Pinduoduo quickly rose to prominence by leveraging WeChat's massive traffic and its own social gaming features. By the end of November 2023, Pinduoduo's market value surpassed BABA-SWR, becoming the largest Chinese concept stock in the U.S. stock market, overturning BABA-SWR's dominant position.

The successful collaboration between BABA-SWR and TENCENT to reverse their previous opposition, while driven by subjective intentions, is also greatly influenced by the era.


Behind this, there is not only the drive of regulatory policies, but also because the internet industry is entering a new development stage, where companies must adapt and change. Especially, the market positions of the two traditional giants have been threatened.

In 2021, the Ministry of Industry and Information Technology proposed to ensure the normal access of legal website links. As a result, the internet industry is transitioning from "blocking restrictions" to "interconnection," and BABA-SWR and TENCENT have also started to gradually break down barriers. In the same year, BABA-SWR was fined 18.2 billion for violating the Anti-Monopoly Law, further accelerating the pace of BABA-SWR's opening up.

In Shen Meng's view, in the past few years, BABA-SWR has been actively rectifying in accordance with policy requirements. The integration of Taobao with WeChat Pay this time is a continuation of regulatory policies, in line with the overall direction of breaking barriers and safeguarding consumer rights.

Beyond policies, China's internet industry is gradually moving away from the high-growth stage. The giants are strategically focusing and converging, seeking high-quality growth within their capabilities, rather than coveting competitors' products and markets. This is also an important background for BABA-SWR and TENCENT to move towards cooperation.

As the industry landscape changes, both BABA-SWR and TENCENT are somewhat preoccupied. In the past year, BABA-SWR's market value has been surpassed by Pinduoduo, and TENCENT's revenue has been surpassed by ByteDance. The rising new kings of the mobile internet era are coming on strong, and BABA-SWR and TENCENT must consider how to stabilize the situation and seize the opportunity to make a comeback to the throne.

The veterans who have experienced multiple cycles in the internet industry have also changed their attitude towards market competition.

Eddie Wu, the new CEO of BABA-SWR who took office in September last year, wrote in his first all-staff letter that the two main strategic focuses in the future are putting users first and being AI-driven. He emphasized that the priority of user needs is above all else. To create the best user experience, one must be more open and seek the broadest openness and cooperation, including with companies that are traditionally seen as competitors.

Jack Ma would certainly welcome BABA-SWR opening up the core e-commerce transaction entrance to TENCENT.

In fact, TENCENT has already shown an open attitude. In September last year, BABA-SWR deepened its advertising cooperation with TENCENT, opening up core advertising traffic such as WeChat Video Accounts, Moments, and Mini Programs to BABA-SWR. Prior to this, TENCENT had already cooperated with its old rival ByteDance in video and gaming.

The examples of BABA-SWR and TENCENT are just one aspect. As the internet industry enters a stage of stock development, cooperation and competition will become the norm.

This will be a new stage where internet companies must not only maintain the depth of their moats but also better integrate industry resources in order to stand out more quickly from the competitive landscape of the industry.