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Alibaba and JD.com dominate the online retail market in China.
China has proposed new rules aimed at limiting the strength of its largest Internet companies.
Regulations show growing unease in Beijing over the growing influence of digital platforms.
The new regulations could affect local tech giants like Alibaba, Ant Group and Tencent, as well as food delivery platform Meituan.
The move comes as the EU and the US also seek to curb the power of the internet giants.
Shares of Chinese tech companies tumbled after the proposed regulations were released on Tuesday, Nov.10.
The news comes as JD.com and Alibaba gear up for Singles Day, the biggest online discounted day of the year.
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The planned offering would take place in Shanghai and Hong Kong on November 5.
Stock liquidation resumed on Wednesday, with Alibaba, JD.com, Tencent, Xiaomi and Meituan falling, more than $ 200 billion below the combined values of these companies.
What do the new regulations say?
The 22-page draft of the State Administration’s Market Regulations (SAMR) will be the first attempt to identify anti-competitive behavior in the technology sector.
The new regulations will attempt to prevent companies from sharing sensitive consumer data, partnering with each other to eliminate smaller competitors and even incur losses to eliminate competitors. .
The new rules will also curb platforms that force companies to make exclusive deals, for which Alibaba has been accused by merchants and rivals.
The regulations will also target companies that treat customers differently based on their data and spending habits.
SAMR is collecting opinions and comments from the public on antitrust principles until the end of this month.
How dominant are these companies?
Alibaba and JD.com dominate the online retail market in China, and together they account for around three-quarters of Chinese e-commerce transactions.
As of September, Alibaba has 881 million monthly active users on mobile devices, more than half the population of China.
Beijing also has its own concerns about the Ant Group, a subsidiary of Alibaba, which was delisted from the stock market last week after regulators raised concerns about the growing power of companies. organize litigation online and how they can influence the financial system in general.
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The EU and the US also seek to curb the power of the internet giants.
The IPO is said to be the largest in the world.
Ant has around 1.3 billion users, mostly in China, where Alipay, China’s leading digital payment system, operates.
Tencent, which has a competitive payment system and also the world’s largest gaming company, may also be under scrutiny.
A global trend?
If the Chinese authorities are concerned about the explosive growth of some Internet platforms, their fears are not the only ones.
The European Union (EU) has published antitrust indictments against Amazon, alleging it abuses its market power in Germany and France.
Meanwhile, the US authorities are cracking down on Google’s market dominance as an Internet search engine.
The US Department of Justice has described Google as an “exclusive guardian of the Internet.”
It is the largest antitrust lawsuit in the United States since the lawsuit against Microsoft in the late 1990s.
