China’s top leader has warned that Beijing will pursue so-called platform companies that have accumulated data – market power – indicating that the pressure on the country’s Internet sector is just beginning.
President Xi Jinping on Monday chaired a meeting of the Communist Party’s General Financial Advisory and Coordinating Committee, which ordered regulators to tighten control over Internet companies, crack down on monopolies, promote fair competition and prevent the spread of capital unrest, state broadcaster CCTV reported. “Internet companies need to improve data security. Financial activities need to be regulated,” CCTV reported.
Unusually harsh comments by XI lieutenants suggest that Beijing is planning to expand its campaign to curb the influence of its largest, most powerful private corporation, which has so far focused mainly on Jack Ma’s Alibaba և, its daughter Ant. The term “platform economies” can refer to a range of mobile հ Internet giants offering services to hundreds of millions of people, from Didi Chuksing to food giant Meituan to e-commerce leaders such as JD.com. Pinduoduo:
“Some platform companies are developing in non-standardized ways, it carries risks,” CCTV said, citing the meeting minutes. “It is necessary to speed up the improvement of the laws governing platform economies in order to fill the gaps and gaps in time.”
The announcement comes days after Bloomberg News reported that the government-controlled market is now looking at Tencent Holdings’s $ 100 billion plus financial empire after ordering an overhaul of Ant. Top financial regulators see Tencent as the next target for increased control by people with their own knowledge. “Like Ant, Tencent will probably need to set up a financial holding company that will include its own banking, insurance and payment services,” said one man, speaking on condition of anonymity because the discussions are private.
Both companies will set a precedent for other fintech players to follow stricter rules, people added. Such a move would spark a significant escalation in China’s campaign to curb the influence of its tech tycoons, which began last year by distorting Ant’s $ 35 billion original offer and issuing new antitrust regulations for technology firms.
Tencent lost more than $ 65 billion in the two days following the report, and its shares traded slightly lower on Tuesday. The company’s WeChat super app is a giant that spans the entire industry, offering everything from chat to bookings to purchases.
Other companies have long accused the service of unfair competition, with competitor ByteDance Ltd. suing Shenzhen-based giant TwT Chinese giant Douyin over access to content from the platform earlier this year. Tencent called the allegations baseless and malicious.
E-commerce Alibaba, JD.com և Pinduoduo share the third largest share of consumer spending in China. According to researcher eMarketer, online shopping should exceed 50% of retail sales in the country this year, which is the first anywhere in the world. That influence has already drawn attention to antitrust control; its new antitrust regulations specifically call for actions such as mandatory exclusivity arrangements, predatory pricing, algorithms that prefer new customers to older ones.
In recent years, a number of other services have gained a great deal of prestige: may come under the scrutiny of regulators, including ByteDance’s Toutiao news aggregators և Douyin. Meituan predominates in food delivery, during which Alibaba’s Ele.me service plays an important role. Didi Chuxing has been the dominant force in the Uber business since taking over China, a deal that a group in the local taxi industry has called for to investigate the antitrust watchdog. Even smaller operators appeared in the discussion of that issue. Start-ups of community group purchases, such as Nice Tuan, have been fined for improper subsidies.
“It’s not a good thing if you’re in the market right now, especially when it comes to fintech’s areas of everyday life like e-commerce and community group shopping,” said Ke Yang, a DST Research Singaporean analyst. : “Dominance in the market now has its downside, whereas in the past it was attractive to investors.”
The development of China’s platform economy is currently at a critical stage, Xin said at a meeting on Monday. It is necessary to focus on the long-term sector, strengthen the weaknesses, create an innovative environment to promote the healthy and sustainable development of the platform economy. Monday’s speech was the first time Xi had specifically addressed platform economies, although he had previously stressed the need to prevent monopolies.
The semi-annual meeting of the party’s financial audit team usually helps to determine the direction and direction of national policy. At their last meeting in September, Xi focused on the so-called “dual-turnover” approach, relying on both international and domestic consumption and production to boost the economy.
China’s efforts to regulate its Internet giants coincide with global control of the industry, as governments from the United States to the European Union and Australia have clashed with companies such as Twitter Inc. and Facebook Inc. It shows how powerful the industry has become. “Basic infrastructure հիմնական national security is needed, և a coordinated global response is needed for its healthy development,” said Chen Xi, an adjunct professor at Xiaotong University.
“Vertically integrated business models for platform companies can ‘limit innovation’, create jobs, ‘their rapid expansion will inevitably hinder the recovery of the global economy,'” Chen said. “This is a global challenge.”