China appears to be ramping up its crackdown on big tech

China appears to be ramping up its crackdown on Big tech and potential monopolies following on from the suspension of Ant Group’s IPO in November Chinese authorities now appear to be moving against e-commerce giant Alibaba which has a significant shareholding in Ant Group.

The State Administration for Market Regulation (SMAR) announced that it is to investigate Alibaba over alleged monopoly practices including forcing merchants and sellers of goods to commit exclusively to Alibaba and not offer their products on other sites.

In a separate but interlinked development financial regulators in China are set to meet with Ant Group in the coming days. The PBOC the country’s central bank said in a statement released this morning that it urged Ant Group to: “comply with regulatory financial, antitrust, and consumer protection requirements”

Ant group responded with a post on its WeChat account which simply said: “Today, Ant Group received a meeting notice from regulators. We will seriously study and strictly comply with all regulatory requirements and commit full efforts to fulfil all related work.”

Both Alibaba and Ant Group were created by Jack Ma who has risen to become one of China’s wealthiest and most influential business leaders. Ma’s personal fortune has been estimated at around US$48.0 billion putting him in the top 20 richest people on the planet. Ma was also placed among the Worlds Top 50 Greatest Leaders by Fortune magazine.

Alibaba which specialises in internet retail and e-commerce and the provision of services to support the same has a market cap of some US$692.0 billion. However, that valuation has been dented by news of the anti-monopolies investigation. In US pre-market trading on Christmas eve Alibaba stock, which trades under the US ticker BABA was down by -3.42%. Though its shares listed in Hong Kong had traded down by -5.0% overnight.

The mood in China has been changing of late and the authorities have let it be known that they are unhappy about the size and power of China’s tech giants.

An example of this was found in a recent editorial from the states “mouthpiece” The Peoples Daily which said that: “efforts to prevent monopoly and anti-competitive practices” were “requirements for improving the socialist market economy system and promoting high-quality development” though it did add that “This investigation does not mean that the country’s attitude towards the encouragement and support of the platform economy has changed.”

The last part was perhaps intended for overseas investors who might be concerned about a possible crackdown by Beijing on the wider market-led economy.

Alibaba’s rival and fellow tech giant Tencent is also thought to be in the sights of regulators though for the moment there have been no official statements about or moves against the company by the Chinese authorities.

The moves by China to investigate potential monopolies within big tech coincide with similar moves in the USA against Facebook and Google and EU investigations into Amazon and its e-commerce business practises.

In an announcement made in early November, the EU Commission warned Amazon that it had found that the company had breached EU competition rules and moved to open a second investigation as to whether or not Amazon gave preferential treatment to its own retail offers compared to those of third-party sellers on the platform.

We may see more and perhaps coordinated investigations of big tech in 2021 when Joe Biden becomes president in the USA the Democrats being seen as keen to clampdown on any antitrust violations at home or abroad.