Big Tech is coming under increased pressure in China as Beijing tightens antitrust rules.
The State Administration for Market Regulation has reported that 12 major e-commerce companies have been fined for “monopolistic behaviors.”
They include Baidu, Tencent, Didi Chuxing, SoftBank and a ByteDance-backed firm.
“The 12 companies were each fined 500,000 yuan [or about] US$77,000 as the deals violated the country’s anti-monopoly law on [the] illegal concentration of business operators,” a statement by the State Administration for Market Regulation said as reported by the official Xinhua News Agency.
- The deals included Tencent’s equity acquisition of the online education platform Yuanfudao.
- They also involved Baidu’s equity acquisition of Ainemo, which specializes in smart home hardware terminals and services, the regulator revealed.
- Tencent said in a statement it would “actively rectify operations,” the Reuters news agency said.
- ByteDance said a joint venture between its affiliated firm and Shanghai Dongfang Newspaper Company was never in operation and the JV was disbanded in January.
- SoftBank declined to comment. Baidu and Didi Chuxing did not immediately respond to requests for comment, Reuters stated.
Big picture: “Many small businesses in traditional sectors have been decimated [by these] tech giants with their deep pockets. Without intervention from market regulators, there is no chance of survival for small businesses, and free-market competition will be destroyed, leaving consumers vulnerable to [a] monopoly,” Tian Yun, the deputy director of the Beijing Economic Operation Association, told the state-run Global Times.
Delve deeper: China has rolled out a tough, new policy to clampdown on big players such as Baidu, Alibaba and Tencent or the BAT grouping. The Wall Street Journal reported that Beijing could even impose a record fine of nearly $1 billion on Alibaba, the massive online shopping portal founded by billionaire entrepreneur Jack Ma. Concerns are growing that it flouted antitrust rules.
China Factor comment: Financial regulators turned their attention to Big Tech after blocking the record $35 billion IPO of Ant Group last year. The fintech company is an affiliate of Alibaba. The China Banking and Insurance Regulatory Commission made the decision after becoming alarmed at the sheer scale of Ant’s online loan operation, fearing it had become a “financial risk.”