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In the News: Would You Use Alibaba Streaming Video – And Is This RIP for Netflix?

This week, Sichenzia Ross Friedman Ference LLP’s Partner Jay Kaplowitz was interviewed by The Street on how the Chinese government could potentially use Alibaba as a source to hack into the data of U.S. consumers if Alibaba was to enter the U.S. market as a video streaming service. Please read the full article below or visit the live article here:

Would You Use Alibaba Streaming Video – And Is This RIP for Netflix?

NEW YORK (MainStreet) — A few days ago, e-commerce giant Alibaba (BABA) rocked the world of video streaming with the announcement that it will start Tmall Box Office (TBO), its own streaming service that will initially be limited to China. That prompted pundits to ponder exactly how immense this threat is to streaming darling Netflix (NFLXGet Report) if the Chinese competitor eventually poaches American consumers.

TBO’s potential viability stateside also begs a blunt and fundamental consumer question: Will U.S. customers trust a China-based company with their personal information?

Mark Tan, a financial advisor with Thrivent Financial in Lake Forest, Ill., predicts Alibaba will eventually enter the U.S. market with streaming, even though offerings are currently relegated to China. Founder and current executive chairman Jack Ma always has seen Alibaba as not just a Chinese company, but a global one, Tan said.

“Our mission, the mission of all of Alibaba, is to redefine home entertainment,” Patrick Liu, Alibab’s head of digital entertainment, told Reuters of the TBO announcement. “Our goal is to become like HBO in the United States, to become like Netflix in the United States.”

Alibaba will follow the Netflix business model, buying some third party content, but will also develop its own, unique programming, according Tan.

Netflix, meanwhile, had been considering its own entry into China. When asked about those plans as well as Alibaba’s possible entry into the U.S. market, Netflix declined to comment.

If Alibaba enters the U.S. market with video streaming, it will not necessarily have smooth sailing. Last year, Bizrate Insights surveyed over 3,500 online buyers and found a majority (63%) are not familiar with the Chinese e-commerce giant.

Bizrate Insights continued: “Of those who are familiar with Alibaba, 65% are likely to interact with (browse or purchase from) a Chinese e-commerce company in general.”

The biggest concerns respondents expressed about Alibaba were long delivery windows, distrust over security of personal and payment information and a preference to “Buy American.”

Those precise themes still surface in discussion of Alibaba. Some fear that China, which is widely believed to have aggressive data hacking operations in the U.S., would tap into Alibaba’s databases. Mike Torto, CEO of Canada-based Embotics, a cloud computing management company, is not optimistic about Alibaba’s role in North American e-commerce. “If you don’t believe that the Chinese government would use Alibaba and the Internet to manipulate, control and further damage the U.S. and our economy, you would be naive,” he said.

Peter Cohan, a visiting lecturer at Babson College outside Boston and tech start-up expert, has a cheerier outlook.

“I am not sure that there is a good reason for Americans to feel less secure about this than they do sharing their personal information with any U.S. company,” he said.

After numerous data breaches at U.S. retailers, from Target  (TGT) to Home Depot (HD), and banks, like JP Morgan Chase (JPM), if American consumers aren’t even safe with domestic companies, they may not feel appreciably more vulnerable using a using a foreign company, he said.

Jay Kaplowitz, a New York lawyer at Sichenzia Ross Friedman Ference LLP, who has handled a number of Chinese corporate clients, says Americans have become inured to hacking risks.

“The Chinese probably have all our information anyway,” he said. “We are so used to being hacked as a society. I don’t see this as an issue.”

Americans are already shopping at 11 Main, Alibaba’s online boutique in the U.S., and they’re also able to shop at AliExpress, Alibaba’s global online marketplace. That familiarity may help Americans adopt the company’s streaming option.

“I shop at AliExpress and lot, and I trust it,” said Shelly Runyon, a senior account executive at PAN Communications in Boston. “They already have my credit card, so I would have no problem participating in a streaming service.”

Americans already buy a bunch of Chinese products, said Mike Plugh, a lecturer in communications at Fordham University in the Bronx.

“Absolutely, Alibaba could succeed [with TBO in the U.S.],” Plugh said. “In the 21st century people are not concerned with the politics of companies. The Cold War mentality is gone.”

Jay Kaplowitz
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