Alibaba vs. Tencent: China's Growing Internet Turf War

Two of China’s richest men are intensifying their rivalry in the world’s biggest Internet market. The country’s largest e-commerce company, Alibaba Group Holding, led by Executive Chairman Jack Ma, is under assault from top Internet player Tencent Holdings, chaired by Pony Ma. (The two aren’t related.) Tencent, a megaportal and China’s version of AOL, got a jump on Alibaba in mobile apps. Its chat software WeChat, released two years ago, has more than 300 million users—eclipsing the mobile app of Sina Weibo, a Twitter-like microblogging site in which Alibaba bought a stake in April. Now Tencent is trying to expand into the kind of fee-generating online payment services Alibaba dominates.

Alarmed by the incursions, Alibaba is ready to rumble. On Aug. 1 the company blocked merchants selling goods on its sites from using rival WeChat apps. The ban limits Tencent’s ability to draw users to its own payment systems, which it introduced for WeChat on Aug. 5. Alibaba said in a statement that it imposed the ban because some sellers were using WeChat to solicit off-site transactions, and gave no timetable for ending the blackout. Instead, it promoted logins with Sina Weibo accounts. Tencent declined to comment.