In today's ExchangeWire news digest: Alibaba and Tencent's China Literature are fined for breaching China's competitions regulation; the South China Morning Post announces that it will remove all their inventory from Asia's open marketplace at the beginning of next year; and Reddit acquires TikTok rival Dubsmash.

Alibaba and China Literature fined by Chinese government

China's market regulator has issued fines against two of the country’s leading internet companies. Alibaba and Tencent-owned e-book division China Literature are being penalised for past business deals that were conducted without regulatory approval.

Each firm will be required to pay CNY 500,000 (£56,931.56) as punishment for what the regulator has deemed ‘anti-trust violations”. For Alibaba, the ruling centres around the company’s equity investments in Chinese mall operator Intown. For China Literature, the fine concerns the firm’s acquisition of film studio New Classics Media.

Whilst the fines aren’t expected to inflict any serious damage upon either companies’ coffers, the aim is to set a precedent for the nation’s internet leaders, according to a spokesperson from the market regulator. Commentators consider the rulings to be a ramping-up of efforts to clamp down on the ever-growing sector, whose power has been of increasing concern to the ruling Chinese Communist Party.

Alibaba and China Literature are the first “variable interest entities” (corporations that operate as domestic firms under the control of foreign parties) to be fined by the regulator, indicating a stronger interest in tackling actors who operate under the controversial structure.

SCMP to leave the open marketplace in January 2021

The South China Morning Post (SCMP) has announced that it will remove all its inventory from the Open Marketplace (OMP) in Hong Kong, Singapore, Malaysia, Vietnam and the Philippines on January 1st 2021. The publisher will instead focus on leveraging their own first-party offerings to make direct deals.

The move comes amidst growing concerns amongst advertisers and publishers surrounding the efficacy of the open marketplace. The impending eradication of third-party cookies and changes to user IDs has made these concerns more pressing, and brought the SCMP to the conclusion that “programmatic deals offer brands and buyers a better way to transact programmatic media”. The change means that advertisers will need to arrange deals with the SCMP directly if they want to run campaigns with the publisher in the new year.

In a press release announcing the news, VP of Digital Ian Hocking said that the SCMP “continue[s] to believe in programmatic buying and see[s] deals as a better way to ensure brand safety and increase performance”, stating that the publisher is confident that leaving the OMP to pursue direct-deals exclusively “will ultimately help to drive ROI for our clients.”

Reddit acquires Dubsmash

Reddit has broken into the short-form video scene after beating rivals Facebook and Snapchat to acquire Dubsmash. The social media platform announced its successful bid for the TikTok competitor today (14^th December 2020), although elected not to reveal any specific details about the impending deal.

Founded by Suchit Dash in 2015, Dubsmash has since grown at a consistent rate, crossing the 1 billion video views per month landmark in January this year. Dash has remained elusive about the app’s other metrics, however, revealing only that 30% of users create videos on a daily basis. Dash also praised the app for playing host to less represented demographics, reporting that nearly 25% of all Black teenagers in the US use the app and that 70% of the platform’s users are female.

Reddit, which currently hosts 52 million daily active users, has revealed that it now plans to integrate Dubsmash’s video creation tools into its own app. However, Dubsmash will continue to exist as an individual app that will remain available for download from Apple’s App Store and Google’s Play Store for the time being.

With the rampant success of short-form video (and video content generally) amidst the COVID crisis, its unsurprising that Reddit has sought to enter the space. Whether the deal sees Dubsmash become a real contender, however, remains to be seen.