China asks Alibaba to sell its media business

According to a report in the Wall Street Journal on March 15th, the Chinese government has asked Alibaba Group to reduce its media assets because Beijing is increasingly worried about the influence of the technology giant on Chinese public opinion.

After Chinese regulators reviewed the list of media assets owned by Alibaba, discussions on the matter began at the beginning of this year. The source revealed to The Wall Street Journal that the Chinese government was shocked by the expansion of Alibaba’s media interests and asked the company to propose a plan to drastically reduce its holdings of media assets, but Beijing did not specify which reductions needed assets.

Alibaba's UC browser was completely removed from all major application stores in China. The British "Financial Times" believes that this move is related to China's CCTV's "315 Gala" on consumer protection issues: In the program, UC Browser was accused of displaying too many misleading advertisements for medical institutions. The software developer has already apologized for this and promised to improve it.

On March 15th, the ninth meeting of the Central Finance and Economics Committee chaired by Xi Jinping pointed out that “some platform companies have irregular development and risks, platform economic development is insufficient, there are shortcomings, and the problem of inadequacy of the regulatory system is also more prominent. "; "Establish and improve the platform economic governance system, clarify rules, draw a clear bottom line, strengthen supervision, standardize order, better coordinate development and security, domestic and international, promote fair competition, oppose monopoly, and prevent disorderly expansion of capital. It is necessary to strengthen regulation. And supervision, safeguard public interests and social stability, and form a governance synergy."

Alibaba, founded by billionaire Jack Ma, has accumulated strong media assets over the years, covering print, broadcast, digital, social media and advertising. It is worth noting that Alibaba holds shares in Weibo and several popular Chinese digital and print news media, including the South China Morning Post, Hong Kong’s main English-language newspaper.

According to the "Wall Street Journal" statistics, as of Monday before the opening of the US stock market, Alibaba held approximately US$3.5 billion in Weibo shares and shares in nearly US$2.6 billion in video platform Bilibili (Bilibili). The source pointed out that Alibaba's power in the media industry is seen as a serious challenge to the Chinese Communist Party and its own powerful propaganda machinery. The Propaganda Department of the Communist Party of China did not respond to the invitation of the Wall Street Journal to visit.

Alibaba declined to comment on related discussions with regulators. The company said in a statement that it is a passive financial investor in media assets: Alibaba's investment in these media companies is to provide technical support for their business upgrades and achieve commercial synergy with Alibaba's core business. Alibaba emphasizes that the group does not interfere with the daily work and editorial decisions of these media.

The discussion of media asset disposal is the latest development in the conflict between the Chinese government and Jack Ma. The Wall Street Journal reported that at the end of last year, Chinese President Xi Jinping blocked Ant Group’s initial public offering (IPO) because the Chinese government was uncomfortable with Ant Group’s complex ownership structure and worried that Ant Group would increase risks to China’s financial system. Xi Jinping is also angry at Ma Yun's criticism of his measures to strengthen financial supervision.

In addition to media and online retail, Alibaba also has a large-scale entertainment department, which mainly includes Alibaba Pictures Group Co., Ltd., which is listed in Hong Kong, and Youku Tudou Co., Ltd., one of China's largest video streaming platforms. A source familiar with Alibaba's entertainment business told The Wall Street Journal that the Chinese government has also reviewed Alibaba's entertainment investment portfolio, although they may not have asked Alibaba to completely cut this part of the business.

In recent years, Chinese officials have been increasingly concerned about Alibaba’s media influence, including how the company can use its investment in news and social media to reshape government policies that are detrimental to its business.

After dozens of Weibo posts about a senior Alibaba executive involved in extramarital affairs were deleted in May last year, the Chinese government's related concerns have grown stronger. The Wall Street Journal quoted officials who saw the report as saying that a subsequent investigation conducted by the Office of the Central Cyber ​​Security and Information Commission found that Alibaba was responsible for disrupting Weibo posts and stated in the report to the leadership that the company used " Capital manipulates public opinion". These officials said that it is the Communist Party that holds public opinion on all media platforms, and the private sector should not assume this role.

The Wall Street Journal also pointed out that in June last year, Internet surveillance agencies publicly denounced Weibo's so-called "interference with online communication" and demanded rectification. In November last year, Xu Lin, deputy director of the Propaganda Department of the Communist Party of China, stated in public that China must "resolutely prevent the use of integrated development in the name of downplaying the party's leadership, and resolutely prevent the risk of capital manipulating public opinion." Xu Lin did not directly mention Alibaba in his speech. Instead, he used the words that appeared in the report of the network monitoring agency.

The Wall Street Journal analyzed that abandoning media interests is not necessarily a big negative factor for Alibaba, because after giving up some non-core assets, Alibaba may re-emerge from the impact of supervision in a more conservative manner. As the authorities maintain tight control over the media, this may also help guide the company to avoid future political minefields.

Alibaba is not the only Chinese tech giant to dabble in the media. Tencent's WeChat has become one of the main channels for Chinese people to obtain news. Toutiao, a news aggregation software operated by ByteDance, uses artificial intelligence to push news to hundreds of millions of users. The Wall Street Journal stated that it is unclear whether other technology companies are considering following the Alibaba model and reducing their media assets.