Alibaba Embraces Tencent’s WeChat Pay as China’s Tech Walls Fall

(Bloomberg) — Alibaba Group Holding Ltd. will finally let shoppers check out via Tencent Holdings Ltd.’s WeChat Pay, eradicating one of the biggest barriers between the Chinese tech leaders’ competing online ecosystems.

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The Taobao and Tmall shopping platforms will allow its hundreds of millions of shoppers to select WeChat Pay — by far China’s most popular online payments service. In the past, Alibaba had favored Alipay, the option created by affiliate Ant Group Co.

Alibaba’s decision coincides with both a deepening consumer downturn and the increasing dominance of Tencent’s WeChat, a social media service and major commerce channel for a billion-plus Chinese. It also comes at the tail end of a years-long government campaign to rein in Alibaba and its peers. Last week, Beijing formally declared Alibaba in the clear, suggesting the government was keen to signal its support for the sector.

“We have always been open to collaborations, and have actively explored interoperability and partnerships with our peers,” Alibaba said in a statement.

China’s internet leaders began dismantling barriers between their competing services after Beijing cracked down in 2020 on what it called their monopolistic behavior. At the time, companies like Alibaba and Tencent controlled vast swathes of the world’s No. 2 economy, and aggressively sought to bar each other from their respective spheres.

Tencent dominated social media via WeChat, Alibaba lorded over e-commerce and, more recently, ByteDance Ltd. led in video via TikTok-cousin Douyin. But regulators warned internet firms to stop blocking links to rival services, prising open so-called walled gardens in a broader campaign to curb their growing monopoly on data and protect consumers.

The industry landscape has shifted since then. In 2022, Tencent began to take down one of those walls when it let users of WeChat link to rivals’ content for the first time in years. Alibaba itself in 2021 added WeChat Pay as an option on certain apps including food-delivery service Ele.me.

Alibaba’s market dominance has also waned as hard-charging rivals such as PDD Holdings Inc. and ByteDance lured shoppers away in lower-tier markets and through innovative social commerce.