Cainiao-SF data standoff ends; problems remain

Updated 2017-06-05 09:31:05 Global Times

Conflict sparked by cloud competition between Alibaba,Tencent

A two-day standoff between Alibaba's logistics affiliate Cainiao Network and China's leading courier delivery company SF Express over data sharing ended over the weekend, but problems persist.

After mediation by the State Post Bureau (SPB), cooperation and data sharing between SF and Cainiao resumed at noon on Saturday, according to a press release issued by Cainiao.

Now, buyers on Alibaba's customer-to-customer marketplace Taobao can track their parcels that are being handled by SF.

When asked about the state of its cooperation with SF's package locker delivery network known as Hive Box, a PR representative from Cainiao told the Global Times Saturday that Cainiao will continue to negotiate with SF during the coming month over data security issues related to this service.

On Thursday, Cainiao said in a Weibo post that SF and Hive Box had suddenly blocked information that Cainiao needed to deliver parcels to customers.

SF responded by saying that Cainiao had removed the company as a shipping option and unilaterally blocked data sent to Hive Box. The data blockage came after Hive Box declined to provide customer information required by Cainiao, which was "irrelevant to Cainiao's businesses," SF said in a post on its official Weibo account Thursday evening.

According to Cainiao's Weibo post, the company planned to carry out logistics data security upgrades for its entire network to protect consumers' privacy, but SF and Hive Box had declined to cooperate. Hive Box had "abnormally retrieved" other courier companies' logistics data via Cainiao and caused leaks of consumers' information, said Cainiao's PR representative.

Cainiao, partly owned by Alibaba, is an alliance set up in partnership with major couriers to provide efficient delivery of parcels bought mainly through Alibaba's online marketplaces.

"The spat between Cainiao and SF is actually a reflection of the fierce fight for big data between Alibaba and Tencent Holdings," Shao Zhonglin, former assistant secretary-general of the China Express Association, told the Global Times Sunday.

News portals such as tech.sina.com.cn have quoted SF as saying that a reason behind its conflict with Cainiao is that Alibaba has long sought to persuade SF to embrace its cloud computing services and stop using those offered by Tencent.

Tencent's cloud service unit did not made any direct public comment on the disputes, but it said in a Weibo post late Thursday that it will support SF in cloud computing, and companies can never pay too much attention to SF's data and business security.

"Big data is very important in Internet era, and the one who controls that data will gain leadership," said Shao.

In 2009, Alibaba founded its cloud service unit, which has developed quickly as the infrastructure for its mammoth e-commerce businesses. During last year's Singles' Day on November 11, the nation's largest shopping spree, Alibaba Cloud processed about 175,000 transactions and 120,000 payments per second at peak times.

Alibaba Cloud runs at least 14 data centers in countries and regions including Singapore and the US.

Cloud computing is a major focus of Tencent too. Founder Ma Huateng said at the Big Data Expo in Guiyang, capital of Southwest China's Guizhou Province, in late May that cloud services will play an important role in the development of the digital economy.

Tencent Cloud, which started operations in 2013, almost half a decade after Alibaba Cloud, will open more than 29 data service centers globally this year, according to Ma.

Competition between Tencent Cloud and Alibaba Cloud will intensify, as big data and cloud computing are the foundations of the development of all mobile Internet services, Liu Dingding, a Beijing-based independent analyst, told the Global Times Sunday.

Data from International Data Corp showed that Alibaba Cloud continued leading China's public cloud market in 2016 with a 40.7 percent share, while China Telecom and Tencent Cloud seized the second and third positions respectively with 8.5 percent and 7.3 percent.

The conflict with SF has raised concerns about the prospects of Alibaba's logistics services, at least in the view of Shao.

"Alibaba's Cainiao alliance was unbreakable until other domestic couriers could grow powerful, like SF did," said Shao. "Major couriers - except SF - must follow the 'rules' of Cainiao as more than half of their business comes from Alibaba's marketplaces."

Unlike the majority of its peers in China, SF is known for its high-end focus strategy, targeting heavy cargo delivery and cold chain business.

Amid the disputes, shares of SF on the Shenzhen Stock Exchange fell as much as 3.7 percent on Friday, closing down 1.28 percent at 53.29 yuan (.8). The fall came even though the company clarified in a stock filing early Friday that the disputes with Cainiao would not affect the company's profit this year.

The SPB said in a release Thursday night that shipments of fresh goods, such as cherries, lychees and mangos, would be affected to some extent.

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