Chinese regulators are taking a closer look at the enormous reach that tech companies like Alibaba enjoy in online media, part of a broader campaign to curtail the growing power of its largest corporations.

Chinese ecommerce giant Alibaba Group Holding Ltd. is in talks with a state-owned conglomerate about a potential deal involving its stake in the social media site Weibo Corp., as Beijing moves to curb the influence of China’s tech giants in the sensitive media sphere.

China’s ecommerce leader is exploring options for its roughly 30% slice of the Twitter-like social media service, according to people familiar with the matter. The discussions between the technology giant and Shanghai Media Group could lead to the latter purchasing all of Alibaba’s stake in Weibo, the people said, asking not to be identified as the information is private.

Regulators are taking a closer look at the enormous reach that tech companies like Alibaba enjoy in online media, part of a broader campaign to curtail the growing power of its largest corporations. Alibaba and its affiliates have over the years built a sprawling portfolio of media assets that include newspapers, television-production companies, social media and advertising assets. Concerned about the company’s influence on public opinion, the government wants Alibaba to offload some of those holdings, Bloomberg News reported in March.

Deliberations are at an early stage and there’s no certainty they will result in a transaction, the people said. A representative for Alibaba declined to comment, while Weibo couldn’t immediately comment. SMG and its owner, the government of Shanghai, didn’t immediately respond to calls and emails seeking comments.

SMG, one of China’s largest state-owned media and cultural conglomerates, would stand a higher chance of gaining Beijing’s approval than a private acquirer. The group is a controlling shareholder of Oriental Pearl Group Co., which operates television stations and online entertainment portals, and also owns 20% in Shanghai Disney Resort, according to the firm’s website.

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Weibo is among the most influential—and controversial—of Alibaba’s media holdings. The social media site scrubbed posts and took down comments relating to a scandal involving an Alibaba partner last year, fueling concern among officials about how censorship, typically wielded by Beijing over matters of national importance, could be employed by private enterprises or individuals. Since then, regulators have called for a ban on private capital participation in the media.

Chinese internet pioneer Sina launched Weibo in 2009, swiftly amassing millions of registered users posting messages of 140 characters or less, and was listed in the U.S. in a 2014 IPO. It had daily active users of about 248 million, compared to 211 million for Twitter.

JD.com boosts its share buyback plan

Alibaba is not the only online retailer reacting to China’s regulatory crackdown on technology companies. Another Chinese ecommerce giant, JD.com Inc. is boosting its share buyback plan by 50%, the latest in a slew of tech firms to repurchase stock.

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JD, which holds the top slot in the Digital Commerce 360 Asia 450 and is China’s second-largest online retailer, will set aside $3 billion for the buyback program, which will be extended until March 2024, it said in a filing Wednesday. That’s up from the $2 billion it had targeted under the plan originally adopted in March 2020.

In response, other retailers are stepping up efforts to repurchase shares and reward investors. Rival ecommerce behemoth Alibaba, which owns Taobao (No. 1 in the Digital Commerce 360 2021 Online Marketplaces Report) and Tmall (No. 2), in August announced it will boost its repurchase program by 50% to $15 billion, while Tencent resumed buying back shares over the summer. Xiaomi Corp. in March also announced a HK$10 billion ($1.3 billion) share buyback plan.

JD on Wednesday unveiled a five-year green loan facility of $2 billion, its first such financing for new and existing green projects. Under President Xi Jinping, China has made reaching carbon neutrality by 2060 a strategic priority and many tech firms regard participating in green efforts to engender greater goodwill with the government.

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Shares of the ecommerce retailer have tumbled as part of a wider rout in tech stocks as Beijing stepped up oversight of issues such as antitrust to data security, while a surprise move by top investor Tencent Holdings Ltd. last week to distribute more than $16 billion of its JD shares has also weighed on the retailer. Regulators over the past week proposed new rules that would increase scrutiny of firms seeking to sell shares overseas.

 

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