BEIJING, China (Reuters) – China has acquired minority stakes, with exclusive rights, in two local units of tech giant Alibaba Holdings Ltd. (9988.HK)Business registration records show, as Beijing has expanded a campaign to strengthen control over online content.
Beijing has been getting “golden shares” in private online media and content companies for more than five years, and in recent years has expanded those arrangements to companies with large amounts of data.
The stakes acquired over the past four months in Alibaba units are firsts for the e-commerce company. Alibaba was one of the main targets of China’s two-year-old regulatory crackdown on the tech giants.
These gold shares, usually worth about 1% of a company, are bought by government-backed funds or corporations that get board representation and/or veto power over key business decisions.
Public business registration records showed that in September last year, an investment company affiliated with the state-owned Zhejiang Media Group acquired a 1% stake in Alibaba’s Youku film and television unit, which is based in Shanghai.
Records showed that Zhejiang Media Group also appointed Jin Jun, general manager of one of its subsidiaries, to the board of directors of the Alibaba unit.
[1/3] The Alibaba Group logo is seen at its office in Beijing, China, January 5, 2021. REUTERS/Thomas Peter
Separate business registration records show that in December, WangTouSuiCheng (Beijing), a China Internet Investment Fund (CIIF) entity set up by the China Cyberspace Administration (CAC), acquired a 1% stake in Alibaba’s Guangzhou Lujiao unit, which focuses Mainly it is “research and experimentation”.
The Financial Times, which first reported on WangTouSuiCheng’s investment on Friday, said the aim of the investment was for Beijing to tighten control over content at e-commerce giant Youku’s video streaming unit and web browser UCWeb.
Alibaba did not respond to a request for comment.
The Financial Times also reported, citing anonymous sources, that discussions are underway for the government to acquire gold shares in gaming giant Tencent Holdings. (0700.HK) which may involve a stake in one of the Group’s major subsidiaries. Tencent declined to comment.
Other companies with gold share arrangements include Full Truck Alliance Co (YMM.N)as well as the mainland subsidiaries of TikTok’s owner ByteDance, Kuaishou Technology (1024.HK) Weibo, Reuters reported earlier.
Sources told Reuters that acquiring such gold shares could be beneficial for companies when they are trying to obtain licenses to publish news online and air video and audio programs online.
Additional reporting by Yingzi Yang, Brenda Goh, and Josh Horowitz; Additional reporting by Rishabh Jaiswal and Marinamay Day. Edited by Uttarish V, Rashmi Aish and Kenneth Maxwell
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