Chinese authorities arrested half a dozen former employees of Tencent, the country’s biggest social networking and entertainment firm, along with a current executive at eCommerce site Alibaba on charges of corruption and bribery, Reuters reported late last week.
“An internal investigation brought to light bribery and corruption among some online video employees … The police have been notified, and we are waiting for the results,” Tencent said in a previous statement.
According to Tencent, the alleged misconduct occurred when current Alibaba executive Patrick Liu was heading Tencent’s online video unit. Liu, along with the other former Tencent employees, left the company in 2013. Liu joined Alibaba later that year and currently holds the title of executive director at Alibaba Pictures Group.
An Alibaba spokeswoman confirmed to Reuters last Thursday (July 9) that the Public Security Bureau took Liu into custody.
“We understand Patrick Liu with our digital entertainment unit has been detained by the authorities,” Alibaba spokesman Bob Christie said in an email to Reuters. “This issue is related to his time at Tencent and has nothing to do with Alibaba.”
In its official Weibo microblog, Alibaba said it was “extremely shocked” by the news of Liu’s arrest, Reuters reported.
The company confirmed it has arranged for all of Liu’s duties to be taken over in his absence in order to protect shareholders. It will also provide him with legal support.
“Patrick Liu was a former member of Tencent’s management and is suspected of corruption while in his position — this far exceeds the boundaries of making mistakes and violated the company’s rules, as well as violating the law,” Tencent explained in its own Weibo post last week, Reuters said.
Alibaba and Tencent are China’s two biggest Internet companies, which have both continued to battle it out as they go toe-to-toe over everything from taxi rides to banking, but most recently each has set its sights on online entertainment, specifically streaming platforms and music.
While Tencent and Alibaba have been competing hard for red envelope payments for several years, Tencent may have escalated the fight this year because it has launched its own online bank — several months ahead of a similar bank that Alibaba has been licensed to launch this year — and wants to press every advantage it can on the financial front.