Campaign to control big tech companies in China

According to the AP, China has recently stepped up its campaign to strictly control large domestic technology companies and aim to reduce technology dependence on the US and Europe.

Illustration. Source: AP
Illustration. Source: AP

Strict control of "tech giants"

China began its antitrust and data privacy campaign at the end of 2020, a move that surprised the country's technology industry after two decades of easing. Businessmen, lawyers and economists all say that the Chinese government is on the right track even as economic growth is being affected by the regulation.

"Chinese tech giants are seen as world leaders in innovation fields, but the Chinese government is still willing to take the most severe measures," said Mark Williams. Europe's leading economist at Capital Economics said.

In April this year, Alibaba - an e-commerce group that provides sales services was fined 18.3 billion yuan (equivalent to $ 2.8 billion) for this "tech giant". There have been many moves to abuse market dominance since 2015. Meanwhile, Chinese investment company Tencent, streaming site Kuaishou, microblogging platform Sina Weibo and social media site Xiaohongshu Also fined for distributing stickers or short videos that are not suitable for children. Tencent's music service has been ordered to terminate exclusive contracts with suppliers.

Lester Ross, head of the law firm WlimerHale's office, said the campaign shows that China expects private companies to comply with regulations set by the government.

China's technology industry has marked a strong development in recent years, and that cannot fail to mention the success of two billionaires, the founders of Alibaba Group - Jack Ma or Pony Ma of Tencent Holdings. While Alibaba is the largest e-commerce company, Tencent is popular with its Wechat messaging service.

In the new plan, China requires "tech giants" to focus on developing robots, chips and other hardware, so many big technology companies, including Alibaba and Tencent, are must participate in this process. The campaign partly reflects China's independence, reducing China's dependence on world technology markets such as the US or Europe. And the US has also restricted China's access to telecommunications and other technology.

The move from the technology company

After launching the campaign, Alibaba announced to invest $ 28 billion in operating system software, processor chip and network technology. The company also pledged $1 billion to train 100,000 developers and tech startups over the next three years.

Meanwhile, Tencent expressed willingness to invest $70 billion in digital infrastructure last year. Meituan, an e-commerce, delivery and service platform, has provided $10 billion in funding for the development of autonomous vehicles and robotics. As for investors, many were severely affected as stock prices plummeted following the move. Tencent's market capitalization dropped from $575 billion to $350 billion. The CEO of Softbank Group, the original investor of Alibaba - Masayoshi Son confirmed that he will make a new transaction in China. Softbank has invested $11 billion in ride-hailing service Didi Global.

On the other hand, delivery and ride-hailing businesses are required to reduce fees with drivers, improving their benefits and security. Meituan CEO Wang Xing promised $2.3 billion in support for environmental and social initiatives. And Tencent pledged $2 billion to philanthropy. Aliaba has spent 100 billion yuan ($15.5 billion) on supporting jobs, rural development and other initiatives under the "Commonwealth" campaign proposed by President Xi Jinping.

China began its campaign to control the technology in November when Beijing asked Ant Group, which grew out of Alibaba's Alipay payment service, to postpone its stock market debut in Hong Kong and Shanghai. The company, which provides online savings and investment services, was asked to downsize its plans and set up banking systems to vet borrowers and manage risk.

The Chinese government has also implemented a campaign to tighten control over data collected by private companies, mainly the two giants Alibaba and Tencent. On August 20, the Standing Committee of the National People's Congress of China voted to pass a new law on the privacy of Internet users' personal information, effective from November 1. China has asked technology corporations to ensure the safe storage of users' data, including setting security standards and banning companies from disclosing information without permission. of the customer and required to limit the amount of collection.

"China has now become one of the most active and powerful countries in efforts to regulate the digital economy," said Angela Zhang, an antitrust expert at the University of Hong Kong law school.

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