Since November 2020, when China released draft guidelines defining anti-competitive behavior by Internet firms for the first time, affiliates of Alibaba, Tencent, JD.com, Meituan and Didi Chuxing have either incurred fines or are being investigated for monopolistic practices. A planned mega-IPO for Alibaba’s Ant Financial was halted at the eleventh hour. And in April, Alibaba incurred a record fine of US $2.8 billion for imposing “forced exclusivity” rules on merchants.
Initially focused on antitrust, data security and cybersecurity issues, the crackdown has spread to societal concerns, from too much homework for young kids (solution: banning for-profit online tutors) to excessive gaming (solution: strict time limits for minors) to obsessive fandoms.
“I think the issues that regulators in China are trying to address are clearly not unique,” said Vey-Sern Ling, managing director of Union Bancaire Privee in Singapore and an expert on China’s Internet economy. “Protecting children, preventing systemic financial risk, preventing market abuse, promoting social stability, fairness, equality, and tightening cyber and data security, personal information protection, etc. We have seen developed countries in the West tackle the same problems.”
“But there is a lot more autonomy in China, much less time spent on discussion/consultation, and implementation is heavy handed,” Ling told Wunderman Thompson Intelligence.
China’s latest bid to tackle income inequality under a “common prosperity” mantra has also put pressure on technology companies and the billionaire tycoons who built them to spread the wealth around.
As to who’s next, “there are sectors where the regulators have shown the willingness to prioritize social objectives over investor interests,” Ling said. “These are financial, housing, education, transportation and healthcare.”