Alibaba's Social Capital Circles the Drain

Treat people like commodities and that's how they'll behave. That's a problem big data can't solve.
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The son of China's richest man labeled it Alipimp. Harsh, but not unfair.

That's what Alibaba Group Holding Ltd. gets when it takes a ham-fisted approach to going social. In trying to encourage users to connect and share more with each other, the company's payment services affiliate Ant Financial released a social networking feature called Circles. The result was users shared rather more skin than Alibaba, or the Chinese government, would have preferred, including offers to hook up from women whose services were unlikely to be free.

The backlash was swift and brutal. Wang Sicong, whose father is real-estate tycoon Wang Jianlin, posted a photo on his verified Weibo account of the Alipay logo over the image of a near-naked woman, with a caption underneath that translated, roughly, to "Alipimp," the Wall Street Journal reported.

Ant Financial, which runs Alibaba's Alipay payment system, followed up with an apology. “Our teams will hold internal discussion to think clearly and put in writing what we want and don’t want,” Executive Chairman Lucy Peng said in a letter obtained by Bloomberg News.

And that's the ultimate question. What exactly does Alibaba want? If the company is aiming to make the Alipay service sustainable and ubiquitous, it needs user numbers and greater engagement. On both counts, it's being trounced.

Tencent Has More Users...

The owner of WeChat has almost twice as many customers as Alibaba

Source: Alibaba, Bloomberg

Alipay is doing well in the business-to-consumer space, chiefly through Alibaba's e-commerce properties but also more and more in physical retail. But in the coming growth market of peer-to-peer, Tencent Holdings Ltd. has a better claim because its social networking apps are more popular and sticky.

Alibaba is aware of the problem.

"To capture the attention and imagination of young people you have to provide more social features," Alibaba Vice Chairman Joe Tsai told Bloomberg's Selina Wang in August. "We want to continue the sense of community so that they'll come back and engage with the platform." 

... and Faster Growth than Alibaba

While expansion in user numbers has slowed for both companies, Alibaba's has almost ground to a halt

Source: Alibaba, Bloomberg

At the heart of the Circles disaster is the way Ant sought to spur engagement. According to one example cited by the Journal, only women could post in public groups, while men were divided into high- and low-ranked users based on their Alipay-calculated credit-ranking scores.

That kind of grading structure, based on sorting "buyers" and "sellers" by their quality, value and relevance, has worked well for Alibaba's e-commerce business. Try porting that to social engagement, though, and you start to turn people into commodities in the oldest ways known to man.

Sure, big data can tackle a lot of the computational challenges brought on by a huge interconnected community, but some problems only humans can solve.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Tim Culpan in Taipei at

    To contact the editor responsible for this story:
    Matthew Brooker at

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