Analysis: China delivers on threats to rein in internet economy

- REUTERS - Mar 18, 2021 -

Tony Munroe, Pei Li -

FILE PHOTO: The logo of Alibaba Group is seen at its office in Beijing, China January 5, 2021. REUTERS/Thomas Peter

(Reuters) - On Tuesday, Chinese livestreaming e-commerce came under scrutiny. On Thursday, it was “deepfakes”. And earlier this month, Chinese authorities imposed fines on operators of community group buying platforms.

Beijing is making good on its threats to clamp down on the sprawling “platform economy”, with President Xi Jinping weighing in on the need to rein in behemoths that play a dominant role in the country’s consumer sector.

The drumbeat of warnings, fines and de-platformings of Chinese digital heavyweights started with last year’s shelving of Ant Group’s $37 billion IPO and has expanded across the sector, battering share prices and prompting some operators to take pre-emptive measures before they are punished.

“With the rapid development of the digital economy, people’s lives have become inseparable from internet platforms,” the official China Daily wrote on Thursday.

“However, after capturing the market, some platforms have abandoned their due social responsibilities and they are trying to monopolize the sector by becoming ‘slaves’ of capital”.

Chinese internet giants led by billionaire Jack Ma’s Alibaba, as well as Tencent, ByteDance and a handful of others built immense scale and market power under an era of laissez faire treatment that ended dramatically with the halting of Alibaba affiliate Ant’s listing in November.

That was followed by a spate of fines imposed on companies for failing to submit past acquisitions for anti-trust review, as well as an anti-trust probe into Alibaba and its “one-from-two” practice of forcing vendors to sell product on only one e-commerce site.

The momentum has intensified.

On Friday, China’s market regulator fined 12 companies, including Baidu Inc, Tencent, and Didi Chuxing over 10 deals that violated anti-monopoly rules.


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