China acquires ‘preferred shares’ in two Alibaba units

BEIJING, China, Jan 13 (Reuters) – China has acquired minority stakes with special rights in two domestic units of tech giant Alibaba Group Holding Ltd (9988.HK), according to company registration records, so that Beijing is extending its campaign to tighten control over the Internet. contents.

Beijing has taken “preferred shares” in private online media and content companies for more than five years, and in recent years has extended those deals to companies with vast amounts of data.

Stakes taken over the past four months in Alibaba units are the first updates for the e-commerce company. Alibaba has been one of the most prominent targets in China’s two-year regulatory crackdown on tech giants.

These preferred shares, typically equal to about 1% of a company, are purchased by government-backed funds or companies that gain board representation and/or veto rights over key business decisions.

Public business registration records showed that in September last year, an investment vehicle of state-owned Zhejiang Media Group took a 1% stake in the Youku Film and Television unit of ‘Alibaba, based in Shanghai.

Zhejiang Media Group has also appointed Jin Jun, the general manager of one of its subsidiaries, to the board of the Alibaba unit, records show.

Separate company registration filings showed that in December WangTouSuiCheng (Beijing), an entity under the China Internet Investment Fund (CIIF) established by the China Cyberspace Administration (CAC), acquired a stake 1% in the Alibaba Guangzhou Lujiao unit, whose main objective is “research and experimentation”.

The Financial Times, which first announced WangTouSuiCheng’s investment on Friday, said the aim of the investment was for Beijing to tighten control over the content of the e-commerce giant’s video streaming unit. Youku and UCWeb web browser.

Alibaba did not respond to a request for comment.

The FT also reported, citing unidentified sources, that talks were underway for the government to take preferred shares in gaming giant Tencent Holdings (0700.HK) which would involve a stake in one of the company’s main subsidiaries. band. Tencent declined to comment.

Other companies that have such preferred stock deals include Full Truck Alliance Co (YMM.N), as well as mainland subsidiaries of TikTok owner ByteDance, Kuaishou Technology (1024.HK) and Weibo, Reuters previously reported. .

Having such preferred shares can be useful to companies when trying to obtain licenses to broadcast news online and to broadcast visual and audio programs online, sources told Reuters.

Reporting by Yingzhi Yang, Brenda Goh and Josh Horwitz; Additional reporting by Rishabh Jaiswal and Mrinmay Dey; Editing by Uttaresh.V, Rashmi Aich and Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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