In China, These Are Odd Times for Uber

WeChat Blocked Uber's Accounts, Again

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Car-hailing apps have waged a heated competition for China's smartphone users.
Car-hailing apps have waged a heated competition for China's smartphone users.  Credit: Tomohiro Ohsumi/Bloomberg
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The stakes are high when it comes to China's internet. There are 668 million people online in China, and that's only half the country's population, so there's room to grow. E-commerce and mobile payments have developed fast. And with internet companies competing for people's wallets and time in a dynamic environment, the battle can get intense.

Take what has happened to Uber. All-in-one mobile app WeChat, one of brands' most important tools for marketing to and connecting with China's consumers, recently blocked Uber's accounts -- again. Internet giant Tencent, which owns WeChat, said Uber hadn't submitted a necessary government internet permit. Uber replied on its microblog account that it indeed had the license.

There's a lot about the spat that's unclear. But Tencent has faced questions about its motives because it has a massive investment in Didi Kuaidi, China's biggest car-hailing app. Uber, which has funding from a rival internet firm, Baidu, is a competitor to Didi Kuaidi. On Uber's microblog, it suggested Tencent's reasons for the shutdown were just a pretext and quoted a Chinese proverb: "If you want to charge someone as guilty, you can always find an excuse."

WeChat has disrupted Uber accounts regularly this year. When the old official accounts were shut down, Uber registered new private ones that were blocked again recently, part of a broader cleanup of accounts. (IP lawyer You Yunting, partner at the DeBund law firm in Shanghai, says that whatever Tencent's motives are, it ultimately decides what accounts it wants to house on its platforms.)

WeChat is not the only front for the car-hailing app fight. Didi Kuaidi has teamed up with Lyft, India's Ola and Southeast Asia's GrabTaxi to form a ridesharing partnership, joining together against Uber.

It should come as no surprise that Tencent "isn't playing cricket with Uber," said Mark Tanner, managing director of China Skinny, a marketing and research agency. Still, it's "a shame, given WeChat's ecosystem makes up such a significant part of China's digital ecosystem now -- it would be like Google blocking all results to Apple, stopping Microsoft emails to Gmail, and Amazon videos on YouTube."

As Mr. Tanner points out, such behavior isn't unique to China. China's contemporary tech scene can sometimes recall the atmosphere of 1990s Silicon Valley, when there were countless initial public offerings, cash was flowing, and "a young Bill Gates and Steve Jobs weren't exactly hugging and singing 'Kumbaya,'" he said.

Rivalries between Chinese internet players – especially between the big three, Baidu, Alibaba and Tencent -- have shaped China's internet, including the online advertising industry.

Years ago, e-commerce giant Alibaba decided to chase the lucrative search advertising market; it blocked search engines like Baidu from indexing its shopping pages, which forced consumers to start their product searches directly in Alibaba's ecosystem. Today, Alibaba still gets a large percentage of revenue from advertising.

In the Alibaba-Tencent battle, links have been shut down between Tencent's WeChat and platforms in the the Alibaba ecosystem, including Xiami music streaming and Taobao shopping. Alibaba has also been known to contact reporters (including this one) to suggest they check out negative story angles about much smaller rival, JD.com, which has a partnership with Tencent.

Despite all the competition, China's tech giants can be pragmatic about cooperating if it's in their interest.

When it became clear that a rivalry by taxi apps backed by Alibaba and Tencent had led to a counterproductive price war, the apps merged, announcing their union on Valentine's Day. They became Didi Kuaidi -- the app now facing off against Uber.