Total revenue at China internet firms fell in 2022 from 2021, the first fall since the data was made available in 2017, as growth momentum at Big Tech firms – including Alibaba Group Holding and Tencent Holdings – waned amid an economic slowdown and tightened regulation. The combined revenue of Chinese internet firms in 2022 shrank 1.1 per cent to 1.46 trillion yuan (US$217 billion), marking a sharp contrast to double digit growth in the previous six years as the once-booming sector was hit hard by China’s Covid-19 controls, according to data released by Ministry of Industry and Information Technology (MIIT) this week. While the slowdown in revenue for Chinese internet firms was expected, the industrywide fall in revenue underlines how quickly the “high growth” scenario for China’s internet industry has ended. Alibaba, which owns the South China Morning Post, reported 3 per cent revenue growth in the quarter to end-September while Tencent Holdings reported a 2 per cent fall in third-quarter revenue – only the second quarterly decline since the company’s listing in 2004. According to the MIIT data, which covers internet service firms with annual revenue above 20 million yuan, internet services in ride-hailing, travel, financial and flat rental services was the hardest hit segment, with a 17.5 per cent year-on-year decline in revenue last year. China approves 88 licences for video games in January, easing pressure Other segments fared better. Enterprises providing online sales such as e-commerce, medical supplies and delivery services, reported a 12.6 per cent year-on-year increase in revenue last year. Meanwhile, companies providing information services, including news and information, search, social, games, music and video, reported 4.9 per cent growth in revenue. The results come as China grapples with multiple economic headwinds, including pandemic-related supply chain disruption, knock-on effects from Russia’s invasion of Ukraine and a slumping property market. The world’s second-largest economy recorded 3 per cent growth last year, compared with 8 per cent growth in 2021, with China’s once-ebullient internet sector hit by a regulatory crackdown that only eased recently. Meanwhile, the ministry has stopped releasing a key data point that helps measure entrepreneurship in China’s internet sector – namely the number of apps available in China. The number of apps in China dropped to 2.52 million at the end of 2021 from 3.45 million at the end of 2020 and 3.67 million at the end of 2019, according to the ministry’s previous annual reports. Chinese authorities have recently signalled a more positive stance on the internet sector, noting its importance in helping to digitalise the economy and create jobs, although the government has yet to roll out specific new policies to support the sector. Chinese online shopping surges on back of Lunar New Year holiday demand China’s internet sector profits grew by 3.3 per cent to 141.5 billion yuan last year, but the growth rate was 10 percentage points slower than in 2021, according to the MIIT data. Five regions, including Beijing, Shanghai, Tianjin, southern Guangdong province and eastern Zhejiang province, earned combined revenue of 124.93 billion yuan last year, accounting for 85.6 per cent of the national total, the ministry said. China still has the world’s largest online population, with the number of internet users exceeding 1.05 billion and an internet penetration rate of 74.4 per cent last year.