Facial recognition technology is now expanding from payment and government service applications down to the "magical" Xianyu platform. According to reports, a Shanghai-based Xianyu user, Ms. Xu, complained that since the second half of 2024, her Xianyu account, which she had used for many years, was restricted from logging in. In July 2025, when Ms. Xu attempted to log into her Xianyu account again, it remained in a restricted login state. After contacting Xianyu customer service, she was told that her account had "theft risks" and was required to submit ID information and complete facial verification to unlock it. When she questioned the necessity of this requirement, customer service only repeated "this is a security verification process," refusing to provide risk assessment criteria or offer manual review options.

**Repeated Violations Without Reform**

Ms. Xu stated, "The Xianyu platform employs low-level risk monitoring methods but makes high-level risk verification through facial recognition the only verification method, which constitutes excessive collection of sensitive information." She added, "I registered my Xianyu account through a verified Taobao account, meaning this account is already verified. Xianyu recognizes my Taobao account and the phone number bound to my Xianyu account, but still insists on requiring my facial information."

In response, Xianyu platform staff said that facial verification can effectively and accurately verify user identity, and the platform protects user privacy, so there's no need to worry about privacy leakage risks. Without verifying user identity and lifting account restrictions, customers cannot perform operations like account cancellation or phone number changes to avoid third-party operation risks.

This is not an isolated case. Since 2020, regulatory authorities have issued verifiable reports showing that Xianyu has been involved in at least three instances of violating user rights.

In January 2024, the Ministry of Industry and Information Technology reported 31 apps for violating user rights, including the Xianyu app. At that time, Xianyu was involved in "misleading users with chaotic redirects in splash screen information windows."

In November 2023, the Zhejiang Provincial Cyberspace Administration investigated and handled 156 illegal and non-compliant apps, citing issues such as failure to disclose collection and use rules, failure to clearly indicate the purpose, method, and scope of personal information collection, collecting and using personal information without user consent, and violating the necessity principle in collection. Xianyu was reported for "failing to clearly indicate the purpose, method, and scope of personal information collection" and "collecting and using personal information without user consent." The Zhejiang Cyberspace Administration ordered it to complete rectification within 15 days.

Earlier in 2020, according to investigations, the Xianyu platform had a facial information reselling chain, where "facial four-piece sets" containing ID photos, bank card numbers, and phone numbers were sold for only 0.5 yuan per set. Criminal organizations used "photo activation" tools to generate dynamic videos that could break through some platforms' facial recognition mechanisms. Technical experts warned at the time that once facial data is linked with other identity information, it could be used for precision fraud, financial theft, and other crimes.

Setting aside past violations, the controversy over Xianyu's mandatory facial verification lies more in its necessity and lack of transparency under new regulations. Beyond government services, facial recognition almost only exists in asset management apps like banks and payment platforms. Second-hand trading software already calls upon payment platforms like Alipay and WeChat during transactions, and when payment software has already passed facial recognition and other identity verification, the necessity of platform facial verification is low. Additionally, Xianyu is one of the apps under the entire Alipay and Taobao ecosystem, with shared accounts, further reducing the necessity of its facial verification.

The "Security Management Measures for Facial Recognition Technology Applications," which officially took effect on June 1, 2025, clearly stipulates in Article 10: "For achieving the same purpose or meeting equivalent business requirements, if other non-facial recognition technical methods exist, facial recognition shall not be used as the sole verification method; if individuals disagree with identity verification through facial information, other reasonable and convenient methods should be provided."

Lawyers point out that Ms. Xu's account has already passed Taobao real-name verification and is bound to a phone number, so Xianyu could completely adopt gentler verification methods, and mandatory facial recognition may violate regulations. The purpose of collected facial data beyond identity verification has never been disclosed by Xianyu.

In the AI era, facial recognition technology has become more sensitive, and criminal chains have upgraded accordingly. Today's AI can learn from massive data to precisely copy individual facial features onto any face in any video, making it difficult to distinguish real from fake. Meanwhile, if biometric data such as voice and body shape are further leaked, AI can even generate digital humans to impersonate real people. Therefore, customized fraud is "within easy reach" for criminal organizations. Facing such significant risks, Xianyu customer service's simple reply to Ms. Xu shows remarkable "carelessness."

**Frequent Management Changes**

This facial data controversy is merely a small footnote in Xianyu's recent history. As one of BABA-W's four strategic-level innovative businesses, Xianyu is deeply mired in commercialization anxiety and ecosystem coordination troubles.

In November 2023, BABA-W CEO Wu Yongming announced the first batch of strategic-level innovative businesses: 1688, Xianyu, DingTalk, and Quark. These four businesses have sufficiently large market space, unique market positioning, align with user demand trends and the group's "AI-driven" strategy, and receive BABA-W's resource allocation for 3-5 years.

As the youngest traffic pools in BABA-W's ecosystem, Xianyu and Quark receive considerable attention from senior management. Official data shows that Xianyu's registered users have exceeded 600 million, with daily average GMV exceeding 1 billion yuan, and over 4 million idle items published daily.

A QuestMobile report released on May 7 showed that Xianyu's MAU (Monthly Active Users) broke through the 200 million mark, reaching 209 million, a year-over-year increase of nearly 20%, with MAU growth ranking first among e-commerce apps. Over 40% of its users are post-95s generation, with post-00s users showing the fastest growth, covering hundreds of interest categories including trendy toys, outdoor activities, and digital products.

In February, reports indicated that when BABA-W founder Jack Ma visited BABA-W's Hangzhou Xixi campus, his first stop was the office area of BABA-W's Intelligent Information Business Group, where Xianyu and Quark are located. During his inspection of Xianyu, he was specially accompanied by Xianyu President Ji Shan. After his inspection, Ma said Xianyu should be a "magical fish" and should become an entertainment platform, using various magical creative ideas to serve young people's lifestyles and create more opportunities for them.

In comparison, in January, Quark upgraded its brand slogan to "AI All-around Assistant for 200 Million People." According to Analysys analysis, Quark is currently the only AI application in China with post-00s young users accounting for over 50%.

While Quark races forward with BABA-W's AI strategy, Xianyu is also exploring the next step in commercialization. However, looking back at the early years, Xianyu was not obsessed with commercialization but tended to build a second-hand trading community.

In June 2014, Xianyu was established, evolving from "Taobao Second-hand." In 2016, Xianyu founder Chen Weiye (code name "Chuduan") proposed that "methods to build trust include not only rules but also community." In his view, community attributes were precisely Xianyu's differentiating value from Taobao. That same year, Chen Weiye promoted the construction of Xianyu's community "Xianyu Fish Ponds," investing 100 million yuan in the first year and 1 billion yuan the following year.

Where there are people, there are conflicts. Xianyu Fish Ponds became mixed with various criminal activities and inappropriate information, while "pond masters" managing the communities mostly practiced "non-interference," leading to a poor reputation for Xianyu's community.

Chen Weiye's community "great undertaking" proceeded with difficulties. In July 2019, Chen Weiye handed over Xianyu's management to Chen Lei, former senior director of Taobao Live and Content Ecosystem Business Unit.

After taking over, Chen Lei rectified issues while vigorously promoting Xianyu Live streaming. In September 2020, Xianyu changed leadership again, with Jin Ke, then BABA-W's current AliExpress industry operations director, taking the position of Xianyu general manager.

After Jin Ke took office, he closed the Fish Ponds that the founder had placed high hopes on, cut redundant businesses like "Xianyu Market," made "trust" Xianyu's keyword, and launched products like "Fun Community" to continue the platform's social attributes. It was also from Jin Ke that Xianyu began attempting commercialization.

According to data, during the 2021 "618" shopping festival, Xianyu invested 900 million yuan in advertising, briefly pushing Xianyu's DAU (Daily Active Users) above 30 million, though this wasn't sustainable.

In March 2022, Xianyu's leadership changed again to Liu Bo, then BABA-W's marketing head, and just one month later, management rights were transferred to current leader Ding Jian, a product manager who participated in Taobao's mobile transformation.

After taking over, Ding Jian returned to the dual track of "community + trading," accelerating Xianyu's commercialization. However, this time the community leaned more toward Gen Z interest communities, focusing more on interest consumer goods like collectibles (anime derivative products), celebrity cards, and trendy toys.

Meanwhile, Ding Jian launched the "Fish Shop" certification system, "Fish Power Value" credit scoring, and "Xianyu Court," continuing Jin Ke's "trust" system construction.

In June 2023, Xianyu announced that starting that month, sellers with over 10 completed orders and amounts exceeding 10,000 yuan would be charged a 1% service fee on the excess portion. This announcement marked the end of Xianyu's nine-year free model, but since service fees were only charged on large orders, user response was generally mild.

At the end of 2023, Xianyu was promoted to a first-level business of Taotian Group, and merchants from other e-commerce platforms began testing Xianyu, particularly merchants from Taobao and 1688, also under BABA-W.

One year later, in June 2024, Xianyu announced that starting September 1, it would charge all sellers a 0.6% basic software service fee, with a maximum of 60 yuan per transaction. Once announced, this quickly topped trending searches on major social platforms. In internet commercial warfare, users extracting benefits from platforms turned into platforms "extracting benefits" from users, and Xianyu's reputation predictably declined.

But Xianyu didn't slow down its commercialization drive. During Xianyu's 10th anniversary in July 2024, Ding Jian said the platform's positioning was shifting from "second-hand trading platform" to "young people's interest trading community." At the end of 2024, BABA-W established an e-commerce business group led by Jiang Fan, where Xianyu would coordinate with Taobao Tmall, 1688, and others.

**Traffic Generation Mission**

In its commercialization rush, Xianyu predictably collided with ByteDance. The parallel approach of trading and social interaction happens to be the model ByteDance's Douyin e-commerce has been trying recently.

According to QuestMobile data, as of the end of June 2025, ByteDance Group's deduplicated total user scale increased 12% year-over-year to 1.168 billion. In comparison, Xianyu just broke through 200 million monthly active users.

This facial data controversy may be a measure Xianyu has taken to enrich user data dimensions. Compared to ByteDance's multi-dimensional user profiling capabilities formed through its product matrix of Douyin, Toutiao, Tomato Novel, and Red Fruit Short Drama, BABA-W has shortcomings in social behavior data. Xianyu has 600 million registered users, and Gen Z's interest consumption data is crucial for BABA-W to understand the young market. Facial information, as biometric data, can further improve user profiling accuracy, providing support for advertising monetization and product recommendations.

Recent personnel arrangements further expose Xianyu's strategic weight. Xianyu founder Chen Weiye was transferred to head Taobao Business Unit in 2023, and in 2025 was reportedly involved in launching "Taobao Flash Purchase." After Taobao's collaboration with Ele.me, daily order volume has exceeded 90 million, with peak periods even surpassing Meituan.

Current Taotian Group CEO Jiang Fan simultaneously oversees Taotian (including Xianyu), Ele.me, and Fliggy, forming the "iron triangle" of BABA-W's local life battle. Meanwhile, BABA-W is integrating a large consumption ecosystem of "far-field e-commerce (Taotian) + near-field retail (flash purchase + Ele.me) + travel (Fliggy)."

With its high-frequency trading attributes, Xianyu has become an important link connecting the membership system, serving as a "lubricant" for the large membership system. For example, users can accumulate "Xianyu coins" through Xianyu transactions, which can be exchanged for Taobao red envelopes and Fliggy coupons, forming a consumption closed loop. This is consistent with users generating traffic for Douyin e-commerce live streaming through Red Fruit Theater, Tomato Novel, and Toutiao.

In the first quarter of 2025, the food delivery and instant retail industry erupted in fierce subsidy wars. JD.com launched "Billion Subsidy," Meituan followed suit, and BABA-W joined with Ele.me, preparing to invest 50 billion yuan and aggressively attacking flash purchases by the end of April. In this melee, Xianyu played an unexpected role.

In July, after the food delivery subsidy war temporarily cooled down, sharp declines in order revenue led some delivery riders to leave. According to official Xianyu data, in just the first half of 2025, 9.87 million second-hand electric vehicles flooded into Xianyu, a 420% year-over-year surge, with average transaction prices dropping from 6,500 yuan to 4,200 yuan.

In response, on July 28, Xianyu urgently launched the "Xianyu Flash Purchase" section, providing vehicle inspection and 90-day warranties, even introducing a "rent-to-own" model where riders could rent vehicles to newcomers, with rental fees offsetting purchase costs. After this battle temporarily "ceased fire," Xianyu became the "hub" for absorbing excess capacity.

But becoming one of BABA-W's new "Four Small Dragons" doesn't mean Xianyu has emerged from difficulties; its commercialization continues to face two persistent problems.

Issues like false labeling for low-price traffic generation and professional sellers flooding screens have long existed. For example, some Xianyu merchants use "90% new iPhone" as bait but actually sell refurbished phones; others exploit keyword loopholes to post inappropriate content. Such behavior erodes user trust, leading to core user loss.

The side effects of fee strategies cannot be ignored. Since Xianyu started charging commissions, the effect on purifying the merchant ecosystem has been limited, but professional sellers immediately transferred costs to selling prices, while individual sellers moved to platforms like Little Red Book. Whether future fee policies can balance revenue and community vitality remains unknown.

Even so, BABA-W is still willing to tolerate Xianyu's "imperfections," fundamentally because of its irreplaceable experimental field value. For example, through Xianyu resumes and "side business" functions attracting users to sell skills (like legal consultation, coffee teaching) and other C2C service model explorations of non-standard service commercialization, paving the way for BABA-W to enter the gig economy.

Offline scenario breakthroughs and brand promotion. Xianyu circulation stores have landed in Shanghai and Hangzhou, providing full-category consignment services, with continued expansion planned over the next three years. This "offline community + online traffic" model is BABA-W's new weapon against Douyin's local services.

BABA-W, JD.com, and Meituan are inevitably converging toward the same goal through different paths—building super apps covering "clothing, food, housing, and transportation." In this blueprint, Xianyu's mission becomes increasingly clear.

As some analysts point out, "Xianyu's real challenge is not commercialization, but finding differentiated positioning within BABA-W's ecosystem: doing what Taobao cannot do, serving people Taobao cannot serve."

When privacy-conscious users like Ms. Xu refuse to "scan faces," can Xianyu still become more inclusive and more "magical"?