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Alibaba’s founder Jack Ma said in an internal statement in end-2013: “The penguins have left Antarctica. They are adapting to the heat, trying to make the entire world their habitat.”
This metaphor has a specific reason. Alibabas fiercest rival Tencent (its firm logo is a penguin) is currently trying hard to enter e-commerce. This equals to invading the traditional business field of Alibabas online stores Taobao and TMall. Ma is particularly concerned that Tencent added e-commerce features to its popular messaging app WeChat, which has several hundred millions of users. In addition, Tencent allied up with the review app Dianping and the online store Jingdong.
Tencent’s attacks are characteristic for the intensified competition in China’s online market. Not only Tencent, but Alibaba and search engine provider Baidu as well are invading the businesses of their competitors. For years, Alibaba focused only on e-commerce, Tencent on social networks and gaming and Baidu on search services. This clear division is currently fading. Especially the diffusion of smart phones contributed to stepping up competition since 2013. The leading enterprises aim to occupy new businesses in the mobile internet and at the same time hold market dominance in their traditional areas.
Alibaba launched a major offensive against Tencent’s dominance in social networks. The e-commerce enterprise cooperates with the micro-blog Sina Weibo and acquired the popular flirting app Momo. With its own products such as Laiwang, however, Alibaba cannot compete with Tencent.
Web search market leader Baidu is not spared from attack either. Alibaba uses the smartphone browser UCWeb to enter this business. Tencent acquired shares of the second largest search engine Sogou. Because online maps are central for location based services, Alibaba (with AutoNavi) and Tencent (with NaviInfo) challenge the dominance of Baidu Maps.
In the “No man's land”, in which none of the three dominated until now, Alibaba, Baidu and Tencent are battling for market shares as well. In online-streaming, for instance, Baidu’s iQiyi/PPS clashes with Youku/Tudou, of which Albaba holds a share of 18.5 percent. So far, there is no end in sight of intense competition. Jack Ma from Alibaba, in any case, claimed in his internal statement: “Instead of sitting around waiting to be slaughtered by the penguins, we need to take the upper hand and invade the South Pole to kill them.”