On 18 August, China’s e-commmerce giant JD.com asked its sellers to stop using the courier STO Express Co., Ltd (STO), without hiding why: “One major reason why contract renewal talks stalled is because the goods on JD are unable to get onto Alibaba.”
Alibaba has controlling shares in STO, which means that with STO on its platform, JD is giving up market share to Alibaba. By the law of parity, JD should also be on Alibaba’s platform, but Alibaba rejected JD’s request, so JD is taking it out on STO and suspending their partnership before their contract ends.
This seemingly complicated situation, in fact, boils down to a battle of interests between JD, Alibaba, and STO, with STO sandwiched and suffering between the two big names.
Over the past few years, the figurative axe has been busy in the online market. Amid the haze of battle to gain a foothold in the mobile online market, the previous subtle friction among the "big four" — Baidu, Alibaba, Tencent, and JD (known as BATJ) — is evolving into direct opposition and conflict, with mutual hostilities and blocks. This tussle began long ago, and moving forward, each will use their own advantage to limit the others, and protect their territory from being invaded.
Each marking territory and trying to shut the others down
In late July this year, Meituan — which has Tencent as its major shareholder — discriminated against Alipay under Alibaba. On 29 July, some users found that when they tried to pay with Meituan, priority was given to Meituan instalments and credit card payments, while Alipay was not listed as one of the payment options. Meituan has, in fact, put Alipay at a disadvantage for a long time, by "hiding" the Alipay option and making users click around to find it and use it.
In the online market, even without sticks or fists, there can also be "blood" with just a click of a mouse or a few strokes on the keyboard.
Back in 2013, Alibaba tried to block out WeChat. On 31 July that year, Alibaba announced that it would halt orders on Taobao through WeChat, and on 9 August, Taobao started to remove images carrying QR codes with external links, in an obvious move against WeChat's QR scanning function.
Tencent has also not been shy to act. It has activated a "cleanup" of retail accounts, mostly those linking to Taobao advertisements. With these two giants going at it, buyers face having to choose between WeChat and Taobao.
This is reminiscent of the competition between China Telecommunications Corporation and China Unicom, where communications lines were dug up and sometimes bloody physical altercations occurred. In the online market, even without sticks or fists, there can also be "blood" with just a click of a mouse or a few strokes on the keyboard. When online companies fight, apart from the usual verbal sparring, there will be provocation, sneak attacks, moles, counter-spying, retaliatory action and other dramatic elements, including the most common blocks.
Blocks between online giants are common, going back to the late 2000s, starting from the huge case involving Microsoft, after which Apple and other big names got involved in a maelstrom of blocks and monopolies.
In China such incidents frequently occur between online companies, such as Alibaba denying Baidu access to information on its website, and JD disallowing Alibaba's etao.com from collecting its data.
Monopoly leads to decline
As online giants block each other, is this normal commercial competition, or monopoly? That is hard to say.
From a legal perspective, there are three points that determine a monopoly. First, whether the market is B2B, B2C, or C2C — which is currently not so easy to assess. Second, proof that the "four big names" dictate the market, and whether one name stands out. Third, whether cutting off data for other parties is legitimate and within regulations.
... (internet companies) want to “lock” users within the “cage” of services that they provide. This shows that China’s internet environment is not yet mature
These self-isolating and intolerant measures carry a suspicion of monopoly, and go against the internet's principle of shared information. The internet is meant to be open, shared, and inclusive. If building the ecosystem fails, and everyone excludes and undermines everyone else, wouldn't that defeat the purpose of the internet?
Currently, it seems that the four major internet players are increasingly making strategic choices based on their own development. They are focused on protecting their own territory and no longer think of themselves as part of the open internet. They lack a sense of social responsibility and are unwilling to create an open arena for competition in the entire industry. Instead, they want to “lock” users within the “cage” of services that they provide. This shows that China’s internet environment is not yet mature, with many flaws associated with traditional business competition, including “hooligan-ish” behaviour like forced buying and selling, and blocking out opponents.
Admittedly, online businesses are not charitable organisations. In this time of mutual connectedness and survival, nobody would give up any growth opportunity. In a freely competitive online market, companies would naturally shift according to the value chain and seek pools of business opportunities. In fact, no company opens up to be altruistic; opening up and creating platforms is all done for commercial benefit, or to protect one’s monopoly. Constantly seeking value add is the inherent nature of online businesses.
However, with today’s rapid development of the online industry, whether within or outside of China, whether BATJ or Google, no internet company has really gained an absolute monopoly. Everything is interdependent. In this context, the result of competition is continued innovation and change. There is mutual benefit to be gained, rather than using underhanded measures like shutting off channels to suppress rivals.
And now, 20 years later, in the mobile internet era, former IT colossus Microsoft is gradually losing its dominance to newer companies like Apple, Google, Facebook, and Amazon. To the internet community, Microsoft is old and doddery.
Some internet giants narrow-mindedly cut off the "connectedness" factor of the internet, and try to dominate users' access to information and data. They greedily build up their own platform while shaking the foundations of the internet. In the long term, this creates barriers to the growth of the internet industry by promoting infighting and fragmenting what should be a free and smooth online network, with obstacles everywhere. Companies will become isolated and inward-looking, and turn incompetent. Once an innovative, disruptive opponent comes along, they might quickly decline.
Twenty years ago, there was also a struggle to the death in the US, when Microsoft used its monopoly to squeeze out internet browser giant Netscape. And now, 20 years later, in the mobile internet era, former IT colossus Microsoft is gradually losing its dominance to newer companies like Apple, Google, Facebook, and Amazon. To the internet community, Microsoft is old and doddery.
User experience should be top priority
All along, China’s internet companies have engaged in blocking out one another, seemingly without considering user experience.
This game of beggar-thy-neighbour among the internet giants is undignified. Right now, the monopoly in most categories in the internet industry is clear. Generally, one company can meet the needs of the entire market in a particular category. The number two company is usually eliminated, which prompts all companies to fight tooth and nail to be number one. Having the courage to go for it is good, but the internet market is one of shared resources. Sharing and inclusiveness, and each company playing to their strengths, would make the market more competitive. For this to happen, it is important for companies to be broad-minded.
Making consumers pick a side and be “monogamous” is overbearing.
The internet transcends time and space, and all the more internet companies should be open. More acceptance and more leeway — positive competition should be the name of the game for internet companies. Any open cooperation is an agreement based on commercial benefits rather than a system of ethics. Block-offs can only lead to decline, and internet companies can only see this if they are pragmatic and objective. Being petty will lead to small accomplishments and vice versa, and overcoming pettiness and being big-hearted in committing to the internet market is the only way to improve the internet industry chain and make it big.
Besides, whatever happens between the internet giants is complicated and should not affect consumers’ choice of platforms and channels. Making consumers pick a side and be “monogamous” is overbearing.
A Chinese saying goes: “One should look far and take in the big picture.” The big internet players should be open about accepting rivals’ products. In the end, it might also be good for their own platforms and users. With that in mind, hopefully JD and STO can start cooperating again, while Alibaba should also give JD some market space. If both sides compromise, there can be brighter days.