October 18, 2021

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China Tech Watchdog Warns Internet Firms Against Blocking Rivals

(Bloomberg) — China’s top technology regulator warned internet firms on Monday against blocking links to rival services, reaffirming Beijing’s order for online giants from Tencent Holdings Ltd. to ByteDance Ltd. to dismantle walls around their platforms.

The Ministry of Industry and Information Technology has summoned executives from the country’s online platforms to emphasize the need to stop shutting out each other’s services, ministry spokesman Zhao Zhiguo told reporters in Beijing. Companies fail to realize that’s a problem for users, he said without naming specific firms.

Regulators have ordered the country’s tech companies to prise open their so-called walled gardens or closed ecosystems, as part of a campaign to curb their growing power. The government has accused a handful of companies of employing blocking and other methods to protect their respective spheres: Tencent in social media via WeChat, Alibaba Group Holding Ltd. in e-commerce with Taobao and Tmall and, more recently, ByteDance in video via TikTok-cousin Douyin.

All three block links from within their services to rivals’ content. It’s unclear however what actions regulators want the big tech firms to take, and by when. Alibaba and Tencent executives have said they will comply, publicly espousing a more open Chinese internet. Earlier this year, Alibaba aimed to set up a Taobao Deals lite app on WeChat and had already invited merchants to participate, Bloomberg News has reported. But Tencent executives said during the company’s most recent quarterly earnings call that it prioritizes the user experience and any opening-up should be measured.

“Restricting access to web links without justification severely affects user experience, damages users’ rights and disrupts market order,” Zhao said at a news briefing. “We’ve asked the companies to practically correct their actions, including blocking links in instant messaging platforms, and solve these problems step by step.”

Tencent has previously been accused of barring rival services on its platforms. ByteDance in February sued Tencent, alleging its rival had violated antitrust laws by blocking access to content from Douyin on WeChat and QQ. The Shenzhen-based company has called the allegations baseless and malicious.

Read more: Alibaba to Open Up Deals App in Concession to Antitrust Campaign

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