In a previous article I looked at Chinese regulators’ crackdown on Didi Global, China’s ride-hailing service. Didi is one of several Chinese tech giants that have been tamed in the past nine months. Prior to Didi, Ant Group, Tencent, Meituan, and Pinduoduo were all quelled by regulators. After Didi, regulators targeted Full Truck Alliance and Kanzhun. They recently shut down online for-profit tutoring and have banned mining cryptocurrencies in China.

Thus far, the Chinese government’s actions have resulted in almost $1 trillion net losses for the Chinese tech sector.

The two big questions are, Why now? and, relatedly, Who’s next?

SupChina has a well-organized explainer on China’s Big Tech Crackdown here.

Another helpful resource is this video from DW, “How China is tightening control of its tech companies”:

According to SupChina, China’s Big Tech Crackdown is not a monolithic initiative, but really three different areas of concern that fall under the jurisdiction of three different, albeit overlapping, governmental departments. Additionally, some companies, like Didi, could fall within any of these areas of concern.

Authoritarian Style Antitrust Probes

The first category of crackdowns is antitrust probes in which companies have been dinged for “anticompetitive behavior.” The antitrust probes are in response to legitimate concerns of exploitation that come out of lax regulations on China’s tech sector when the government favored growth and global dominance over regulations. For example, e-commerce marketplaces like Alibaba, Pinduoduo, JD.com, or Taobao have engaged in an unspoken “picking one from two” policy in which vendors are only allowed to sell their wares with a particular marketplace and will be penalized for posting with a competitor.

SupChina compares China’s antitrust probes to the U.S.’s antimonopoly investigations into Silicon Valley’s tech giants, but the two have important differences. The Economist has several articles that do a good job of parsing out the nuances. In “China offers a masterclass in how to humble big tech, right?”, the article shows how the Chinese Communist Party’s (CCP) “regulatory authoritarianism” contrasts the U.S.’s methods for dealing with monopolies. For example, while antitrust laws have been around in China since 2008, they were rarely enforced on the tech…

Source: https://mindmatters.ai/2021/08/whats-behind-chinas-crackdown-on-big-tech/