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BEIJING (BLOOMBERG) – China on Tuesday (Nov. 10) introduced detailed regulations for the first time to eradicate monopolistic practices in the Internet industry, as Beijing seeks to reduce the growing dominance of corporations like Alibaba Group Holding and Tencent Holdings.
The country’s antitrust watchdog is seeking comment on a series of regulations that establish a framework to restrict anti-competitive behavior, such as collusion to share confidential consumer data, alliances that weed out smaller rivals, and subsidizing services. below cost to eliminate competitors.
They can also require companies operating the so-called Variable Interest Entity, a vehicle through which virtually all major Chinese Internet companies attract foreign investment and are listed abroad, to apply for specific operational approval. And they also restrict targeting to specific customers through their online behavior, a common practice adopted by gamers both at home and abroad.
The latest proposal follows heightened scrutiny of tech companies around the world, as regulators investigate the extent to which internet giants from Facebook to Alphabet’s Google can use valuable data to shore up their dominance. Consumers in China, home to some of the world’s largest corporations, from e-commerce giant Alibaba to WeChat operator Tencent, have protested in recent years against the gradual erosion of their privacy through technology, from facial recognition to big data analytics. Alibaba and Tencent were down more than 3 percent in Hong Kong, in line with a broader tech selloff.
It is not clear how the regulations established by the State Administration for Market Regulation will be enforced. Beijing increasingly seeks to lessen the influence that a handful of its tech corporations exert over vast swaths of the economy. It investigated Tencent’s music division’s exclusive deals with publishers last year, and regulations changed more recently to control risk in fast-growing microcredit entities like Ant Group. This latest step derailed Ant’s initial public offering of $ 37 billion (S $ 49.8 billion) last week, before it completed what would have been the world’s largest offering on record.
The twin Chinese firms now dominate e-commerce and gaming, and are key sponsors of leaders in adjacent businesses such as food delivery giant Meituan and car transport leader Didi Chuxing. Together they have invested billions of dollars in hundreds of emerging mobile and internet companies, earning the status of the world’s largest smartphone and internet king maker by users. Companies like ByteDance, which owns TikTok, and NetEase, a rival to Tencent, which have stood out without the endorsement of either, are considered rare exceptions. In other areas, Baidu dominates online search.
The new rules were proposed in accordance with China’s Antitrust Law, which included broad language governing internet companies in January for the first time. The watchdog will seek public comment on the regulations until November 30.
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