China Roundup: Beijing is tearing down the Digital ‘walled gardens’

Hello and welcome back to TechCrunch’s China roundup, a review of recent events influencing the Chinese IT environment and their implications for the rest of the world.

This week, China takes steps to dismantle the walled gardens that its internet behemoths have built over the years. Deeproute.ai, a recently founded autonomous driving startup, and transfer, a fast-growing cross-border financial service provider, both announced big fundraising rounds.

The Chinese internet is notoriously compartmentalized, with a few “super applications” each claiming their own cozy, protective domain, attempting to keep rivals out while locking users in. Links to Alibaba’s Taobao marketplace and ByteDance’s Douyin short video service, for example, cannot be seen or rerouted on Tencent’s WeChat messaging. This is in contrast to WhatsApp, Telegram, and Signal, which all provide pleasant URL previews within chats.

E-commerce platforms combat competition in a variety of ways. Taobao’s default payment method is Alibaba’s subsidiary Alipay, rather than its archrival WeChat Pay. JD.com, a rival to Alibaba sponsored by Tencent, pushes consumers to pay via its own payment system or WeChat Pay. However, changes are afoot. At a press briefing this week, a senior official from China’s Ministry of Industry and Information Technology stated, “Ensuring regular access to legal URLs is the essential prerequisite for expanding the internet.” Unjustified online link blocks, he continued, “impact users’ experience, harm users’ rights, and disturb market orders.”

When it comes to preventing pornography, disinformation, and dangerous content, blocking third-party connections has some merit. In China, content providers likewise tightly adhere to censorship guidelines, thereby suppressing politically sensitive debates. These principles will remain in place, and MIIT’s new directive is aimed at cracking down on anti-competitive behavior and weakening the dominance of bloated internet behemoths. The push to abolish digital walled gardens is part of MIIT’s drive to restore “order” to the Chinese internet, which began in July.

While crackdowns on online companies are common, Beijing’s recent announcements — ranging from new data security measures to tightened gaming prohibitions — demonstrate Beijing’s determination to limit the power of Chinese internet companies of all kinds.

According to the MIIT, the deadline for web platforms to unblock URLs is September 17. Almost all of the big internet companies have quickly published statements stating that they will strictly adhere to MIIT’s demands and assist in the healthy development of the Chinese internet.