Source | Bohu Finance (bohuFN)

On September 5, Taobao announced that it would gradually enable WeChat Pay for all Taobao and Tmall merchants after September 12.

The day before, Taobao and Tmall (Taotian) announced that to enhance the shopping experience for consumers, Taobao planned to add WeChat Pay capabilities and was currently soliciting opinions on this matter. After the solicitation period ends, Taobao will adjust its platform rules. This adjustment will cover all Taobao and Tmall merchants.

At this point, China's Internet interconnectivity has made substantial progress.

01 Taobao enables WeChat Pay, furthering interconnectivity

Regarding this interconnectivity, multiple parties have expressed positive attitudes.

Tencent stated that WeChat Pay has always adhered to an open cooperation philosophy and actively explored interoperability with various fields. Previously, WeChat Pay has successively collaborated with UnionPay Cloud Flash Pay, JD.com Pay, payment platforms under the three major telecom operators, and the digital yuan, among others, to achieve payment interoperability. Tencent will continue to explore in the future to provide users with convenience while ensuring transaction security.

Regarding Taobao's integration with WeChat Pay, some have pointed out that only Alipay will be affected. In response, Alipay stated: "Openness, collaboration, innovation, and sharing are the fundamental spirits of the Internet and the general trend of industry development. Alipay will uphold these principles and continue to deepen strategic cooperation with the Taotian Group, increasing technological and product innovation to create greater value for merchants and consumers."

As of September 6, Bohu Finance found that the WeChat Pay option was not yet available on the Taobao payment page. Regarding this situation, the official Taobao customer service team responded that WeChat Pay was still in trial operation and had not been fully launched yet.

(Tested Taobao App has not yet shown WeChat Pay option)

Interestingly, as Taobao breaks the ice with WeChat Pay, Meituan Food Delivery and Alipay have also shaken hands amicably. On September 4, Meituan Food Delivery and Hotels launched Alipay mini-programs and conducted joint operations. It is reported that since 2020, Meituan's bike-sharing, battery sharing, pharmacy, and food delivery services have successively cooperated with Alipay.

The industry generally believes that with Taobao adding WeChat Pay and Meituan's in-depth cooperation with Alipay, China's Internet will embark on a new round of "interconnectivity," bringing mutual benefits to all parties.

(Meituan Food Delivery accepts Alipay payments)

02 Why interconnectivity?

Every time interconnectivity makes slight progress, the media inevitably mentions the phrase "huddling together for warmth." In fact, this is indeed an important role of interconnectivity.

Since the beginning of this year, competition among e-commerce platforms has been turbulent. At the beginning of the year, platforms vied to deepen their low-price labels in an attempt to cover a broader consumer base. However, it is evident that not all platforms can afford to be as reckless as Pinduoduo in pursuing low prices.

Alibaba struggled to keep up. In the second quarter of this year, Alibaba maintained the previous quarter's trend of "increasing revenue but not profit." The financial report showed that Alibaba achieved revenue of RMB 243.236 billion in the second quarter, a year-on-year increase of 4%. At the same time, Alibaba's net profit in the second quarter was RMB 24.022 billion, a decrease of 27% year-on-year; net profit attributable to ordinary shareholders was RMB 24.269 billion, a decrease of 29% year-on-year.

The atmosphere of excessive competition was intense, and all platforms were seeking new outlets.

It is worth mentioning that in the past, to consolidate their competitive barriers, Alibaba and Tencent blocked each other. However, this blocking eventually boomeranged back onto them.

Pinduoduo relied on WeChat's social traffic to become Taobao's biggest competitor; to obtain traffic, Taobao turned to platforms like Douyin, Kuaishou, and Xiaohongshu for connections.

Given the current situation, huddling together for warmth has become one of the few breakthrough options among platforms.

Daniel Zhang, former CEO of Alibaba, once affirmed the value of interconnectivity: "Interconnection is the original intention of the Internet, and openness is the foundation of the digital ecosystem. The large cycle between platforms can generate far greater social value than the small cycle within a single platform. The interconnection and openness between platforms will result in a win-win situation for all."

Taking Tencent and Alibaba as examples, Tencent boasts the largest domestic traffic pool, while Alibaba excels in e-commerce and payment. By combining these strengths, they can expand their business significantly.

According to 36Kr, analysts estimate that after Taobao partners with Tencent to enable WeChat Pay, Taobao's daily active users (DAU) will increase by millions, primarily among users over 55 years old and young users aged 18 to 26. For Tencent, this cooperation will directly generate new revenue streams.

03 Why is interconnectivity so difficult?

Four years ago, Meituan removed the Alipay option from its payment interface. At that time, in response to outside questions, Wang Xing retorted on Fanfou, "Why doesn't Taobao support WeChat Pay yet?"

At that time, Taobao and WeChat had been blocking each other for years. In other words, interconnectivity is not as easy as it seems.

In September 2021, relevant business departments of the Ministry of Industry and Information Technology held an "Administrative Guidance Meeting on Blocking Web URL Links" and proposed compliance standards for instant messaging software, requiring platforms to lift blocks by September 17.

At that time, the giants nodded in agreement and expressed their willingness to actively cooperate. However, subsequent actions showed that this interconnectivity initiative progressed slowly, akin to "squeezing toothpaste" - a little here, a little there. Those who squeezed too much had to backtrack.

In February of this year, "Taobao orders can now be paid directly through WeChat Pay" trended on social media. At that time, the official Taobao customer service team responded that the WeChat Pay function was currently only available to select users and could only be used for purchasing specific items. According to reports, this function would gradually be rolled out to all users. More than half a year later, there has finally been new movement.

After years of back-and-forth, what exactly makes interconnectivity so challenging?

Martin Lau, President of Tencent, once addressed the issue of platform interconnectivity, stating that Tencent's ecosystem is inherently open, but the practical issues faced in platform interoperability include whether resource-rich platforms offering substantial subsidies would affect merchants on the WeChat platform; whether Tencent could handle issues such as counterfeiting and piracy on other platforms; and how Tencent should respond to vastly different business policies among platforms.

Ultimately, platform interconnectivity is a complex issue.

Jiao Haitao, a professor at the Civil and Commercial Law School of China University of Political Science and Law, also mentioned that "interconnectivity may still require a boundary. It certainly does not mean complete openness or data sharing, as some radical views suggest, but rather the need to establish reasonable boundaries.""Under various risks, extending an olive branch has become the safest path for exploring interconnectivity.

After more than half a year, the "toothpaste" of interconnectivity has been squeezed out a little more. What makes this time different is that it has been hailed as "a historic ice-breaking moment, finally breaking down the core load-bearing wall between the big players.""In today's excessively competitive environment, interconnectivity may indeed be a way to reverse this trend.

References:

1. National Business Daily: Netizens are buzzing! Taobao announces support for WeChat Pay, plans to adjust platform rules to cover all merchants! Responses from Tencent, Alipay, and experts

2. China Entrepreneur: Alibaba and Tencent Compromised (Alibaba and Tencent compromise)

3. Bohu Finance: Taobao enables "WeChat Pay," how far is true interconnectivity?

4. The Economic Observer: WeChat Official Accounts, Douyin, and Baidu interconnectivity? The next step in interconnectivity: where are the boundaries and future?

5. Lanjing Finance: Alibaba's second-quarter revenue increases but profits do not; the company loses another 6,729 employees

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