China accelerates plans to put a leash on its internet giants | The Daily Star
03:22 PM, November 14, 2020 / LAST MODIFIED: 01:02 PM, November 15, 2020

BYTES

China accelerates plans to put a leash on its internet giants

It all started when China's poster boy Jack Ma, founder of Alibaba and one of the richest men in China, took a shot at the Chinese financial regulator at a global conference. Ma pointed out some risks and ill-practices of the Chinese financial system which the government did not take lightly.

Since then, the e-commerce giant is being shot one curveball after another. ANT Group, the parent company of Ma's most prized ventures, was supposed to go public this month. But now the process of getting listed in Shanghai and Hong Kong Stock Exchange, according to several industry insiders, has been halted by the explicit directions of the Chinese premier.

Moreover, the Chinese government is fast-tracking a new legislation to curb the influence of internet companies after the Jack Ma fiasco.

So, what's in this regulation? In the guise of an anti-trust law, which the government has drawn inspiration from the west, the new regulation aims to root out 'monopolistic practices' of the big fishes in the market. The State Administration for Market Regulation (SAMR), has already published the first draft of the rules for everyone. The draft legislation indicates several frameworks to allow small scale companies to thrive in the market. It does so by penalising or adding the need of regulatory approval for any move that might seem monopolistic in nature. These monopolistic practices have also been vaguely outlined in the regulation i.e. forming of ventures or alliances; collecting, collating and sharing of consumer data; targeting consumers based on online behaviour, operating at below cost to curb out competition, specific guidelines when taking foreign investment, etc. Anyone violating these regulations will be facing dire consequences as well. They would be forced to divest assets, tech infrastructure, IP rights; provide direct access to the legal books and infrastructure and, if required, make necessary changes as per government guideline.

According to Morgan Stanely, this new regulation is going to hit Alibaba (e-commerce and payment), Tencent (videogames & social media) and Meituan (food delivery) the hardest. However, international investors weren't totally surprised by this move of the Chinese government. The Xi Jinping regime has been attempting to diminish the hold of Chinese internet giants for a while now. Tencent's music publishing subsidiary was subject to a lengthy investigation not so while back on grounds of predatory market practices. Some even guesses, Ma's statement was a good way to mount pressure on the government as these regulations were impending anyways. In addition to that, as the e-commerce scene is becoming fiercely competitive, some analysts of Wall Street are guessing the new regulations might now take long term toll on Alibaba after all.

Whatever the case might be, but Alibaba has already started to get its fair share of beating. Since the announcement of these regulations, stock prices of the internet giants have started to take hit as well. Despite having a $56 Billion on sales in a single day during its 11.11-singles day shopping event, the shares of Alibaba took a nose-dive and lost around 10% of its total stock value.

Stay updated on the go with The Daily Star Android & iOS News App. Click here to download it for your device.

Grameenphone:
Type START <space> BR and send SMS it to 22222

Robi:
Type START <space> BR and send SMS it to 2222


Banglalink:
Type START <space> BR and send SMS it to 2225

Leave your comments

Top News

Top News

Top