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Tencent and Alibaba released their second quarter financial reports for 2024. Tencent's revenue and profit both increased, and its net profit growth rate exceeded 50% for two consecutive quarters. Alibaba is still in the adjustment period. Its revenue increased and its profit decreased year-on-year, but it is still much better than the first quarter. Its operating profit, which reflects the basic business, increased from 14.7 billion yuan to 35.9 billion yuan month-on-month.

The focus on the performance of large companies is a true reflection of market participants' concern for the future of the Internet. After all, it is shameful for a company to be unprofitable for a long time, and leading companies that do not make money are tantamount to a slap in the face of industry confidence.

From platform economy governance that focuses on anti-monopoly and preventing disorderly expansion of capital, to normalized Internet supervision, large companies have gone through a historical cycle of internal and external consolidation. It is better to do beautifully than to shout loudly, and making money is the best proof of confidence in the industry.

Data is not isolated, nor can it be defined by simple increase or decrease. The answer should be found in the underlying business that supports the data. For example, Tencent’s “domestic game market revenue has resumed growth” must be mixed with joy and sighs.

Games are the ballast of Tencent, and Tencent is the vane of the game industry. To make money from games, Tencent must not only fight with new and old rivals such as NetEase and Mihoyo, but also maneuver in policy space such as protection of minors and approval of game licenses: preventing minors from becoming addicted is the bottom line, and achieving healthy growth of games is the goal.

Even just at the level of game competition, there are many angles to consider, including business choices and policy impacts.

"Honor of Kings" returns to TikTok, ByteDance sells part of its gaming business to Tencent, and Tencent and Apple discuss the profit sharing of small games... All kinds of cooperation that are "unprecedented to see", from far-reaching to doing what they should and not doing what they shouldn't, are strategic shifts for the companies involved, and are benefits to users as the anti-monopoly "interconnection" continues to be implemented.

The pattern has been opened up, and user benefits have turned into performance benefits, which will inevitably benefit industry confidence.

Alibaba's ballast is e-commerce. The old overlord is facing even more fierce siege. JD.com has been chasing it for more than ten years, and Pinduoduo, Douyin, and Kuaishou e-commerce have risen as latecomers.

Even so, the revenue of 100 billion yuan and profit of 10 billion yuan in a single quarter show Alibaba's business stability. More importantly, JD.com and Pinduoduo also have profit levels of 10 billion yuan in a single quarter. Douyin and Kuaishou e-commerce are not listed or have not disclosed separately, but their ability to make money is not much worse.

With several large companies and hundreds of billions of yuan in profits, e-commerce has avoided falling into the dilemma of zero-sum game and opened up a larger market with new forms such as live e-commerce and social e-commerce. In this process, large companies that have maintained their business are more likely to encounter challenges, but their ability to withstand pressure and turn around, as well as their ability to make money stably, give themselves and the industry confidence.

On the day of Tencent's earnings report, it wrote an article recalling its 20 years of listing. Its voice is the voice of many large companies: the three-month financial report is a pressure, but also a motivation. If you have experienced the wind and waves, you will know that the red sea is only 438,000 square meters, and the rest of the sea is blue.

But I have to add one more thing: To reach the blue ocean, you need real money and silver to build a solid ship.

You see, Alibaba CEO Wu Yongming's interpretation of the financial report is very straightforward: most of Alibaba's important Internet technology businesses will gradually break even within 1-2 years and gradually begin to contribute to scale profitability.

Beijing Business Daily commentator Zhang Xuwang