Internet firms lock horns over sports lotteries

Sports lottery sales have taken off with the football World Cup, and China's Internet titans are battling for a piece of that action as each seeks to boost its share of the mobile payments market.

QQ Lottery, a lottery sales channel, Tencent Holdings Ltd's popular instant messaging service, recently announced that it has temporarily blocked Alipay, the e-payment arm of rival Alibaba Group Holding Ltd, a move that stops QQ users from using Alipay to top up their betting accounts on QQ.

The Shenzhen-based Tencent, which may soon lose its title as China's largest Internet company by capitalization as Alibaba heads to what could be a record initial public offering in August, said in a statement to China Daily on June 24 that it takes a long time for Alipay to transfer money to people's accounts, so it has decided to block Alipay temporarily for the sake of users' experience.

"We are in talks with Alipay ... on this issue," the statement said. It also said users can use Tenpay, Tencent's own e-payment tool, and WeChat, the company's dominant mobile messaging app, to top up their betting accounts.

However, Alipay has rebutted Tencent's claim of its services "endangering users' experience".

The press office of Alipay, China's leading third-party payment player, declined to make any further comment.

Though Tencent said QQ lottery will reopen its access to Alipay as soon as the bug gets fixed, insiders said it is unlikely that there are malfunctions with a well-established payment tool such as Alipay. The situation reflects the tension between Alibaba and Tencent as they compete for lottery sales and mobile payment, analysts said.

Li Zichuan, an analyst with a Beijing Internet consultancy, Analysys International, said the online lottery market is a "deep sea" in China and companies involved need to increase their sales during peak sales seasons, such as for the World Cup.

"Alibaba's Taobao marketplace is the largest seller of online lottery tickets in China, but Tencent has clearly made big effort to sell lottery tickets through mobile devices," Li said.

Alibaba has an advantage in owning China's largest customer-to-customer online platform Taobao, but Tencent has integrated lottery sales functions on many of its smartphone apps, including messaging app WeChat, Li said.

Analysys International says Taobao Lottery, the leading seller, had 11.3 percent of China's online lottery market in the first quarter.

Tencent accounted for 4.5 percent, becoming the fourth-largest seller of online lottery tickets in the same quarter.

Online lotteries accounted for about 10 percent of the total lottery sales market in China, Li said, adding that online lotteries usually take more than 30 percent of overall lottery sales in developed countries.

Tencent also wants a bigger market in mobile payments, Lu Jingyu said, who covers the mobile Internet sector at iResearch Consulting Group.

Mobile payments are seen as a critical component for monetizing and ecosystem building for both Alibaba and Tencent.

"Alipay enjoys a dominant position in mobile payments as Alibaba builds its empire on e-commerce, and people are used to spending money in its system."

"However, Tencent has made a tremendous effort to develop consumers' habit of spending money in its system, including encouraging people to place their bets and pay for their sports lottery through WeChat."

In the updated version of WeChat, released on June 23, Tencent added many new payment features.

The "my wallet" feature allows people to transfer money to other people's accounts, and it also allows people to deposit cash into their individual WeChat accounts, which means WeChat's wallet is becoming increasingly similar to Alipay Wallet, the app of Alipay.

"It would not take a genius to find out Tencent's ambition in mobile payment," Lu said.

mengjing@chinadaily.com.cn

(China Daily Africa Weekly 06/27/2014 page23)