Are China’s walled gardens about to crumble?
Could China’s latest crackdown on tech giants' data silos actually boost performance marketing in the region?
Over the weekend, China's industry ministry told its biggest technology companies, including Alibaba, Baidu, Tencent and Bytedance, to stop blocking each other's website links from their platforms.
First reported by national newspaper the 21st Century Business Herald citing unnamed sources, the ministry of industry and information technology has put forward standards on how companies control links in instant messaging services, with more measures to come.
Announcing the move in Beijing, Zhao Zhiguo, spokesperson for the Ministry of Industry and Information Technology, said that restricting normal access to internet links without a valid reason “affects user experience, harms the rights of users and disrupts the order of the market “.
"At present we are guiding relevant companies to carry out self-examination and rectification," he said.
Instant messaging platforms, such as QQ, WeChat and Weibo are to be the first area the ministry is going to enforce cross-platform link sharing. Over time, other areas could include social media and e-commerce platforms, which would have bigger implications for measured marketing.
The ministry has instructed all platforms to be unblocked by a certain time and failure to comply would lead to ‘other measures’, which have not been specified.
Companies that attended the meeting, which was held on Friday, included Alibaba, Tencent, ByteDance, Baidu, Huawei and Xiaomi, the newspaper said.
This move marks the latest part of a regulatory crackdown in the country across industries, from tech to entertainment and gaming companies. For performance marketers, this move is the most significant yet. Together, tech giants Baidu, Alibaba and Tencent account for more than 50% of the total digital advertising market in China, with Tencent and Sina Weibo making up the top five.
The sheer size of these companies in the world’s biggest internet market throws up huge logistical (and marketing) problems once they fail to communicate with one another.
The problem China faces is similar to the Apple Vs Android issues faced in the west in terms of sharing data across platforms. This has particularly hampered health tracking apps in the wake of COVID. At code scanning terminals, Alibaba's DingTalk could not be shared on the WeChat platform in March last year, causing users to encounter difficulties in resuming work across provinces.
The division also forces other internet companies to take sides. Tencent blocks users from sharing content from the short video app Douyin owned by ByteDance (known as TikTok in western markets) on its WeChat and QQ instant messaging apps. In another case, Alibaba’s Taobao and Tmall e-commerce marketplaces do not allow the use of Tencent’s WeChat Pay service as a payment option.
An opportunity for smaller players?
As China looks at reducing the power of its tech giants it could encourage the growth of independent players, such as third-party data providers or supply-side platforms, to help advertisers work with multiple publishers more easily.
There was little room for independent third-party data providers and adtech vendors to grow in China. For example, there are very few independent SSPs and large media groups like Alibaba and Tencent continue to dominate the market.
The walled gardens may not collapse, but they are getting lower consumers and advertisers are slowly getting more choices, while the media and ad tech ecosystem will grow more diverse than it is currently.