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Alibaba Opens Up Walled Garden To Allow Rival Tencent's Payment System In Some Apps

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Chinese regulators have announced several mandates to curb the dominance of domestic tech behemothss. As a consequence, e-commerce giant Alibaba Group Holding Limited (NYSE: BABA) has been forced to open up its walled garden.

What Happened: Alibaba has added rival Tencent Holdings Limited (OTC: TCEHY)'s WeChat payment system in some of its apps, including the Ele.me food delivery app and Damai online ticketing platform, according to media reports.

The WeChat payment system is now co-existing with Ant Group's Alipay and other payment options.

Alibaba reportedly confirmed the addition and stated that it will strive to "find common ground" with peers to better serve consumers.

WeChat Pay isn't available on Alibaba's flagship Taobao app. A representative of Taobao reportedly told Bloomberg it is actively working toward introducing multiple payment methods on its platform.

Related Link: Alibaba Analyst Says Regulatory Environment 'Challenging,' But Worst Is Over

Why It's Important: In mid-September, China's Ministry of Industry and Information Technology issued an ultimatum to internet companies to cease blocking each other's links on their sites or risk facing regulatory action.

The regulator premised its mandate on the need to improve user experience, protect the rights of users and maintain market order.

The Chinese government has been vocal about curbing the dominance of these conglomerates. Alibaba, with its Taobao and Tmall ecommerce platforms; Tencent with its WeChat social media platform; and ByteDance with its Douyin short-video sharing app were allegedly using their dominant market positioning to suppress competition.

BABA Price Action: Alibaba shares were down 0.46% at $149.44 midday Tuesday.

Related Link: 3 Alibaba Analysts Say Valuation Is Attractive Despite Q1 Disappointment

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