Chinese authorities began a crackdown on domestic Big Tech in late 2020, fearing that large internet platforms were becoming uncontrollable. This effort to bring the tech industry under Beijing's control has wiped out trillions of dollars in market capitalization, crippled one of the most dynamic sectors of the world's second-largest economy , and accelerated the polarization between the US and China. As a result, leading Chinese tech companies that were once on par with their American counterparts have significantly shrunk in size.
Here are some key milestones in China's 32-month crackdown on domestic technology:
November 2020
Ant Group's IPO – potentially the world's largest – was canceled at the last minute in Shanghai and Hong Kong, shocking the global investment community. The IPO was halted after Alibaba founder Jack Ma made controversial remarks. Ant Group is Alibaba's fintech company.
Authorities quickly brought Ant Group's operations under scrutiny under traditional financial regulation, forcing the giant to undergo internal restructuring.
In late November, 27 major internet companies, including Tencent, Meituan, ByteDance, and Alibaba, were summoned to address alleged monopolistic practices, unfair competition, and counterfeit goods. The State Administration for Market Regulation (SAMR) published guidelines for combating internet monopolies.
December 2020
At the annual Central Economic Work Conference, top Chinese leaders emphasized the need to curb “disorderly capital expansion,” aiming to restrain the influence and scale of big tech. The message investors and entrepreneurs received was that the era of rapid growth in the internet industry was over.
On Christmas Eve, SAMR officially announced the launch of an antitrust investigation into Alibaba.
April 2021
China's market regulators fined Alibaba a record 18.2 billion yuan (US$2.8 billion), equivalent to 4% of its 2019 revenue, for abusing its "dominant position in the Chinese online retail platform service market since 2015." Following this, the antitrust agency summoned 34 technology companies, including Alibaba, Tencent, and Meituan, to a meeting and urged them to pay attention to Alibaba's case.
July 2021
Regulators began reviewing mergers in the early 2000s and fined Big Tech companies for failing to report certain transactions to facilitate antitrust assessments. At least 22 fines, each 500,000 yuan, were issued against Alibaba, Tencent, and Didi Global.
Consequently, Big Tech's M&A deals have slowed down. Companies have begun divesting from previous investments to shrink their balance sheets.
China's Cyberspace Administration (CAC) launched an unprecedented investigation into Didi for national security and data breaches, just two days after Didi's IPO on the New York Stock Exchange. This decision opened a new front in the crackdown on Big Tech, causing other IPOs by Chinese companies in the US to be put on hold.
Didi was banned from allowing users to register on its main app. Two months later, China's Data Security Law came into effect.
October 2021
China fined Meituan 3.4 billion yuan for abusing its market position through coercive "choose one or the other" practices, forcing sellers to sign exclusive agreements. The fine is equivalent to 3% of Meituan's domestic revenue in 2020.
January 2022
The storm is showing signs of subsiding as authorities issue guidelines to promote the sustainable and healthy development of the platform economy. It reaffirms Beijing's commitment to cracking down on monopolies, unfair competition, and data abuse, but sends a positive message by acknowledging the role of Big Tech in the economy and encouraging its growth.
May 2022
Vice Premier Liu He told several tech CEOs that the government would support the sector's development and initial public offerings (IPOs), raising hopes that the worst was over.
July 2022
The Central Commission for Dispute Management (CAC) fined Didi Global 8 billion yuan for data breaches, ending a year-long investigation.
December 2022
Chinese President Xi Jinping attended the Central Work Conference in Beijing. The conference concluded that internet platforms would be supported to “fully showcase their capabilities” in stimulating the economy, creating jobs, and competing internationally.
January 2023
Didi Global had its new registration restored on the app after receiving approval from the CAC. Also this month, Ant Group and 13 other platforms said they had essentially completed business remediation under the guidance and supervision of financial regulators.
July 2023
Two and a half years have passed since the government scrapped Ant Group's IPO. Ultimately, Ant Group was fined a total of 7.1 billion yuan for violating regulations related to "corporate governance and personal financial protection." This move is seen by industry insiders as the final blow in China's crackdown on technology.
Later, Premier Li Qiang offered support for major technology companies at a symposium, while the National Development and Reform Commission praised Alibaba, Tencent, and Meituan for their contributions to the country's economic growth and progress.
(According to SCMP)
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