HONG KONG (Reuters Breakingviews) - WeChat is eating into the foundation of Jack Ma's empire. The billionaire controls Alibaba and Ant Financial, China's dominant e-commerce and payments outfits, together worth more than $350 billion. But users are increasingly turning to Tencent's all-in-one mobile messaging platform to pay and shop for things. The trend is a threat to Ma's behemoth.
Technology giant Tencent is expected to deliver another strong set of quarterly results on Wednesday. Much of the focus will be on the fast-growing mobile payments platform hosted within the company's popular chat app. WeChat Pay lets nearly 900 million users transfer money to one another, book movie tickets, and buy coffee, amongst other things. That is all in one app.
Graphic: Tencent and Alibaba face off: reut.rs/2rp8R0Z
WeChat Pay is serious competition for Alipay, the central plank of Ma's fintech jewel. Malls in China's major cities now accept both applications. In the fourth quarter of last year, Tencent's market share in mobile payments more than doubled year-on-year to 37 percent, according to data from local research firm Analysys. Alipay's share declined from over 70 percent to 54 percent over the same period.
True, mobile payments in the People’s Republic are soaring – iResearch estimates transactions will increase 43 percent this year to 55 trillion yuan ($8 trillion). Ant collects masses of data on its users. The idea is that by sifting through the spending habits of millions of customers, Ant can push out wealth management products, consumer credit and insurance better than anyone else. But last year’s valuation of Ant at $60 billion may assume a larger share of payments and ancillary services in the future than the startup may obtain.
The outlook is tough in shopping, too. Alibaba’s quasi-monopoly in e-commerce provides a huge network of merchants and shoppers that channel payments through Alipay. But users of WeChat can now, through the same app, shop on Alibaba rival JD.com. And Tencent is aggressively adding more services and retailers into the mix, such as online travel agent Ctrip.com. That could over time crowd out the attractions of Alibaba.
Ma over the years has tried and failed to break into China’s messaging app scene, now the worry is that Tencent is leveraging the power of the social network he saw but failed to harness.
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