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Fierce Online Competition on the Road to Chinese New Year

| Feb 04, 2015 07:12 AM EST

China WeChat Red Envelope

As the galloping of the Chinese zodiac's horse slows down to an easy gait, the year of the goat beckons, and although the latter animal sign is known for peace and a trusting nature, the latest clash between Tencent Holdings and Alibaba Group indicates the opposite.

While technology analysts are less surprised by the former's action in the red envelope online-service arena, further closures were of a more unexpected nature.

The age-old tradition of younger family members accepting red envelopes containing money from elders during China's annual Spring Festival is now a historical remnant, as the country's online giants have invented virtual services that allow money to be transmitted digitally. With just the press of a button, the red envelopes now travel on the Internet's information highway. And yes, the money is still in red envelopes, but they are made of pixels now instead of paper.

Alibaba's financial arm, Alipay Wallet, had recently prepared for China's peak period of red-envelope sending by updating its service so that users could share red envelopes on both of Tencent's mobile chatting apps, WeChat and QQ. However, the new feature was rendered useless on Monday night without any word of explanation from Tencent (the website displays a "security concerns" message).

On Wednesday, the TechInAsia website tried to calm down any users who were upset by the sudden change, explaining:

"WeChat has its own red-envelope-sending service, so stopping Alipay users from sending money easily to their WeChat friends makes some sense."

It is also worth noting that the online red-envelope concept was first launched by WeChat last year.

Alipay released an official statement on the day after the shutdown, stating that the WeChat sharing function was never a part of Wallet's original product design. The statement explained: "We only offered the 'share to WeChat' function after receiving requests from some users."

However, Alibaba did not make any comments in regard to WeChat's cessation of sharing connections with Alibaba's music apps, Xiami and Tiantian Dongting, which was a Tencent move that confused technology analysts.

In addition to Tencent's silence, TechInAsia was unable to find a reason for the company's decision to cease WeChat access to Alibaba's music apps. However, the AsiaOne website mentioned that the Weibo Corp. social media platform, in which Alibaba has a stake, has started its own online red-envelope service.

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