Explainer | A timeline of China’s 32-month Big Tech crackdown that killed the world’s largest IPO and wiped out trillions in value
- Since Beijing quashed Ant Group’s IPO in November 2020, the upheaval in China’s tech sector has hit Alibaba, Tencent, Meituan and Didi
- A nearly US$1 billion fine levelled against Ant Group this month has been taken as a sign that the crackdown has finally come to an end
Chinese authorities initiated a regulatory storm against the country’s Big Tech firms in late 2020 out of concerns that the country’s major internet platforms were becoming too large and powerful.
Beijing’s discipline of the tech sector wiped out trillions of dollars in market value from Chinese tech companies, kneecapped one of the most dynamic sectors in the world’s second largest economy, and accelerated US-China decoupling. As a result, China’s large tech companies, which once rivalled their US counterparts in size, are now much smaller.
Here are the major milestones of China’s Big Tech crackdown that kicked off 32 months ago.
Ant Group’s IPO plan under the spotlight after regulatory fine, share buy-back
November 2020
China’s financial watchdogs rushed to bring Ant’s operations under the purview of conventional financial regulations, forcing the tech giant to undergo internal restructuring.
December 2020
China’s top leaders highlighted at the annual Central Economic Work Conference that the country must prevent the “disorderly expansion of capital”, a goal used to curb the influence and size of Big Tech. The message to investors and entrepreneurs was that the “barbaric” growth of China’s internet industry was over.
On Christmas Eve, the SAMR announced that it had officially launched an antitrust investigation into Alibaba.
April 2021
China’s market regulator fined Alibaba a record 18.2 billion yuan (US$2.8 billion), equivalent to 4 per cent of its 2019 revenue, for abusing “its dominant market position in China’s online retail platform service market since 2015”.
The antitrust authority then summoned 34 technology companies, including Alibaba, Tencent and Meituan, for a meeting and demanded they “pay full heed to the warning of Alibaba’s case”.
July 2021
As a result, Big Tech mergers and acquisitions plummeted, and companies started to divest previous investments to downsize their balance sheets.
China’s powerful internet regulator, the Cyberspace Administration of China (CAC), also launched an unprecedented probe into Didi for violations of data and national security, two days after it launched a US$4.4 billion IPO on the New York Stock Exchange. The move opened a new front in the Big Tech crackdown, bringing Chinese IPOs in the US to a halt.
Didi was ordered to stop registering new users on its main app. Two months later, China’s Data Security Law came into force.
October 2021
January 2022
China’s regulatory storm started to ebb when authorities released a guideline promoting the “healthy and sustainable development” of the platform economy. It reaffirmed Beijing’s commitment to cracking down on monopolies, unfair competition and abuse of data, but the document also struck a more positive tone by recognising the role Big Tech firms play in the economy and encouraging their development.
May 2022
Vice-Premier Liu He told a few tech executives that the government would support the development of the sector and public listings, giving tech stocks a shot in the arm and raising hopes that the worst of Beijing’s regulatory scrutiny was over.
July 2022
The CAC imposed a fine of 8 billion yuan on Didi Global for data violations, ending the year-long investigation.
December 2022
President Xi Jinping addressed the Central Economic Work Conference in Beijing. The meeting concluded that internet platforms will be supported to “fully display their capabilities” in boosting the economy, job creation and international competition.
January 2023
Didi Global said it had resumed new user registrations for its ride-hailing app, after getting approval from the CAC.
The same month, Ant Group and 13 other platform companies said they “have basically completed business rectification” under the guidance and supervision of financial regulators after being ordered to address various compliance issues in late 2020.
July 2023
Two-and-a-half years after the government killed Ant Group’s IPO, financial regulators fined the fintech giant a total of 7.1 billion yuan for breaking rules related to “corporate governance and financial consumer protection”. The move was seen by industry experts as the end of China’s crackdown on the tech sector.
Chinese Premier Li Qiang later offered support to major tech companies at a symposium while China’s powerful economic planning agency praised Alibaba, Tencent and Meituan for their contributions to the country’s growth and technological progress.
