Beijing is asking Alibaba to release its media resources

Alibaba, founded by billionaire Jack Ma, has over the years brought together a formidable portfolio of media assets spanning print, broadcasting, digital, social media and advertising. Highlights include stakes on the Twitter-like Weibo platform, and various popular Chinese digital and print media, as well as the South China Morning Post, Hong Kong’s first English-language newspaper. Several of these holdings are found in listed companies in the United States.

This influence is considered to pose serious challenges to the Chinese Communist Party and its own powerful propaganda apparatus, the people said.

The party’s propaganda department did not respond to a fax request for comments.

Alibaba declined to comment on discussions with regulators about possible alienations of media assets. In a statement, the company said it is a passive financial investor in media assets.

“The purpose of our investments in these companies is to provide technological support for their business update and to promote commercial synergies with our basic trade businesses. We do not intervene or get involved in the day-to-day operations of companies or in editorial decisions, ”the statement said.

Discussions on the disposal of assets are the latest development in a series of executions between Beijing and Ma, who was China’s most famous businessman. Late last year, Chinese leader Xi Jinping personally undertook plans by Ant Group Co., Alibaba’s financial technology subsidiary, to launch what would have been the world’s largest initial public offering. amid growing unease in Beijing over Ant’s complex ownership structure and concern that Ant was adding risk to the financial system. Xi also became angry with Ma for criticizing his efforts to strengthen financial supervision.

Antitrust regulators are also preparing to charge a record fine of more than $ 975 million for what they call anti-competitive practices on Alibaba’s e-commerce platforms, the Wall Street Journal previously quoted people with knowledge of the issue. In addition, Alibaba would be required to put an end to a practice whereby, according to regulators, the technology giant banned traders from selling goods on both Alibaba and rival platforms.

Beyond retail and online commerce, Alibaba also has a major entertainment division, which consists primarily of Hong Kong-listed Alibaba Pictures Group. Ltd.

and Youku Tudou Inc., one of the largest video streaming platforms in China. Officials also reviewed Alibaba’s entertainment portfolio, although there may be no need for absolute divestments in this part of Alibaba’s business, according to people familiar with discussions related to Alibaba’s entertainment business. Alibaba.

It is unclear whether Alibaba will have to sell all of its media resources. Any plan put forward by Alibaba will need the approval of the top Chinese leader, people familiar with the matter said.

Concern has grown in recent years about China’s official status in Alibaba’s media influence and how the company may have leveraged its investments in news and social media to influence government policies that are considered unfavorable to their business.

These concerns grew after an incident in May last year when Weibo’s posts about the alleged involvement of an Alibaba executive in an extramarital affair were removed.

A subsequent investigation by the China Cyberspace Administration, the country’s Internet surveillance dog, found that Alibaba was responsible for interference with Weibo publications and said the company had used “capital to manipulate public opinion.” “in a report to management, the newspaper reported. , citing officials who saw the report. The Communist Party is the one that controls public opinion on all media platforms and the private sector should not take on the role, officials said. Alibaba owns approximately 30% of Weibo, listed on the Nasdaq, and has been the social media company’s largest customer, having contributed nearly $ 100 million in advertising and marketing revenue in 2019 to its platform, according to the most recent annual data available.

In June, the Internet watchdog publicly reprimanded Weibo for what it called “interference with online communication” and asked it to rectify the situation. In November, Xu Lin, deputy director of the party’s central propaganda department, said in a public forum that China should “resolutely ban the dilution of party leadership on behalf of [media] convergence, to protect oneself decisively against the risks of capital manipulated by public opinion “.

He did not identify Alibaba by name during his speech, but used the words that appeared in the cyber surveillance dog report.

Disinvesting its media interests is not necessarily a big negative for Alibaba, which could re-emerge from the regulatory attack in a safer position with Beijing after relinquishing some non-core assets. It could also help keep the company away from future political minefields, as authorities maintain strong control over the media.

Alibaba is not the only Chinese technology giant dedicated to the media. Tencent Holdings Ltd.

The WeChat messaging service has become one of the main ways ordinary Chinese people receive news. Bytedance Ltd. operates the popular news aggregator Jinri Toutiao, which uses artificial intelligence to send news to hundreds of millions of users.

It is unclear whether any other technology company will have to follow the same pattern as Alibaba to consider the disposition of media assets.

Alibaba’s media investments began before the company reached international fame with its record IPO in the New York Stock Exchange in 2014. Over the years, Alibaba and Ant bought stakes in some of the media. most popular in the country, including those focused on business. Yicai Media Group and news portals focused on Huxiu.com and 36Kr.com technology.

One of the most notable acquisitions was the South China Morning Post, which has its roots in the era of British colonial rule in Hong Kong. He has also set up joint ventures or partnerships with powerful state media such as Xinhua News Agency and local government-run newspaper groups in Zhejiang and Sichuan provinces.

The media often filled Alibaba’s openings with enthusiasm, given the tech giant’s deep pockets and digital experience. Since it was bought by Alibaba in 2016, the Post has expanded its digital news offering and editorial team and completed the refurbishment of its Hong Kong headquarters.

Some journalists and readers were concerned that Alibaba, which has offices a few floors above the Post’s editorial office, would interfere with newspaper coverage to please Beijing. But sometimes the newspaper published stories that seemed unfavorable to Chinese leadership, including broad coverage of the 2019 and 2020 Hong Kong protests and Beijing’s growing control over the city.

Ma, explaining the reasons for his acquisition of the Post, said in a public forum in 2017 that he never interfered in the operations of the newsroom and respected journalism.

“[We] it must not let the media fall, it must not let the media lose themselves nor must they let the media lose objective and rational communication because of money, ”Ma said at the event, organized by Xinhua.

Write to Jing Yang to [email protected]