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Pedestrians view their smartphones as they walk along a sidewalk in Beijing on Wednesday, Aug. 9, 2017. Photo:: AP

Tencent, JD and dozens of Chinese tech firms ordered to ‘learn from Alibaba’ as antitrust regulator keeps foot on crackdown pedal

  • Regulators ordered 34 companies including Pinduoduo,, Kuaishou, Bilibili and Didi to conduct a ‘comprehensive self-inspection’ within a month
  • Regulatory scrutiny is one factor weighing on Chinese technology stocks in the US and Hong Kong

China’s regulators hauled in 34 of the country’s largest technology companies, with a combined value that surpassed the UK’s economy, for a haranguing on Tuesday, as the government widened the scope and upped the ante on its crackdown on Big Tech.

Tencent Holding, Meituan, ByteDance and this newspaper’s owner Alibaba Group Holding were among the companies hauled in for a meeting in Beijing with the antitrust watchdog, cyberspace administration and the tax authority, according to a statement by the State Administration for Market Regulation (SAMR).
The meeting, hosted by the China Cyberspace Administration and the China Taxation Administration, aimed to ensure that every major internet firm in China got the message from the US$2.8 billion fine slapped on Alibaba, so that Big Tech firms will be fearful and respectful of the rules of the industry, according to an official summary of the meeting published by SMAR.
The lecture included an instruction for attendees including Pinduoduo, Kuaishou Technology and Didi Chuxing to “pay full heed to the warning of Alibaba’s case,” and conduct “self-inspections” in the coming month. They were also required to publicly disclose their commitment to conduct business in compliance with laws, according to SAMR.
A motorist travels past an Alibaba Group Holding’s office building in Shanghai on Thursday, Dec. 24, 2020. Photo: Bloomberg

“Regulatory lines can’t be crossed and red lines of laws can’t be touched,” the SAMR statement read.

SAMR said it would carry out follow-up checks after the rectification period and those that failed to address misconduct would be “severely” punished. 

A Tencent sign is seen during the China Digital Entertainment Expo and Conference (ChinaJoy) in Shanghai on August 3, 2018. Photo: Reuters

The firms, which also include the online shopping site VIPshop, the food delivery and produce platforms and Dingdong Maicai, were warned that Beijing would not show any leeway when it came to misconduct.

These redlined behaviour included forcing merchants to pick one platform, abusing dominant market position, making hostile bids to acquire top players in specific market segments, misusing big data to charge unfair pricing to certain clients, turning a blind eye to inferior quality products, leaking customer data, as well as evading tax payments.

Forcing merchants to “pick one from two” was regarded as misconduct that caused “huge harm” and must be “rooted out”, according to the statement.

“This move strikes at the root of the problem,” said Zhao Ye, a partner and antitrust specialist at Beijing-based law firm Jingtian & Gongcheng. “Not only giant companies like Alibaba, but small companies too, cannot implement the ‘picking one from two’ approach,” he said, adding that the meeting showed Beijing’s determination to bring the internet industry under control. “It’s not clear who is going to be punished next, but in terms of who is going to be regulated next, it is very clear: every company in the [internet] sector.”

A delivery courier for Meituan (centre), travels through an intersection in Shanghai on Monday, March 22, 2021. Photo: Bloomberg

The 34 internet service providers, many of which are listed in the US and Hong Kong, were told to “enhance their sense of responsibility and give priority to national interests.”

Their combined market value was at least US$2.7 trillion, surpassing the economic output of the United Kingdom, the world’s fifth-biggest economy. The list also included the online shopping site, the games publisher NetEase, China Literature, the short-video platform Bilibili, the travel sites and Qunar, the video streaming site iQiyi, and Sougou.

“You must strictly avoid disorderly expansion of capital to ensure China’s economic and social security, and you must strictly avoid disorderly monopoly to ensure fair market competition,” according to the statement, referring to Beijing’s guidelines for the companies.

At the same time, the regulators added that the enhanced regulatory discipline was by no means intended to kill their businesses.

“Strengthening the governance of illegal behaviour of platform companies does not mean that the state’s attitude to support and encourage the platform economy has changed,” the regulators said, adding that the purpose of the move was to build a “new order” for fair competition and healthy development of the platform economy. 


China kicks off antitrust probes into Alibaba over alleged monopolistic practices

China kicks off antitrust probes into Alibaba over alleged monopolistic practices
Regulatory scrutiny is one factor weighing on Chinese technology stocks in the US and Hong Kong, except in the case of Alibaba, which has already been punished and saw its shares gain this week. On the other hand, Hong Kong-listed Meituan, has lost over 12 per cent this week.

All platform companies must also conduct comprehensive investigations of tax-related issues in accordance with tax laws, regulations, policies and systems, and actively carry out self-examination and self-correction, authorities said