01/11/2021, 14.05
China
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Hi-tech giants in Beijing's crosshairs

The Chinese Communist Party wants to reduce the influence of companies like Alibaba and Tencent. The authorities have few means and laws to counter large groups. The model to follow is the one proposed by the European Union.

 

Beijing (AsiaNews) – China's Communist Party's legal affairs department announced over the weekend that the authorities plan to sanction the unfair business practices of large monopoly groups; whilst not explicitly mentioned, the main targets are hi-tech companies such as Alibaba and Tencent.

In December, the Chinese Communist Party (CCP) launched an anti-trust campaign as one of its economic priorities for 2021.

Last month, the government fined Alibaba and Tencent for failing to seek approval before buying smaller competitors.

Alibaba is also under investigation for alleged monopolistic practices, such as requiring its customers – consumers and retailers – to use only its e-commerce platforms.

Founded by billionaire Jack Ma, the worst blow against Alibaba came last November when its attempt to get its financial arm, the Ant Group, listed on the stock market was suspended.

The listing, the highest in history (US$ 39.7 billion), was blocked because Ant's business would not be in line with new government rules on micro-financing via web platforms.

According to several observers, the government has targeted China’s hi-tech giants because they have become too big, and therefore represent a potential threat to the Party.

Party leaders were not amused when on 24 October Ma publicly criticised the country's financial system.

Analysts point out that China’s technology market is in fact poorly regulated; companies like Alibaba can "abuse" their dominant position.

In order to foster technological innovation, Chinese authorities have for years given a free hand to hi-tech giants; as a result, it will now be difficult to regulate the sector.

The first problem is that State Administration for Market Regulation (SAMR) is unable to deal with all violations of antitrust laws.

Caixin notes that the antitrust agency has only 50 employees; by comparison, its counterparts in the United States and the European Union employ thousands.

In addition, hi-tech companies are hiring former judges and government officials to help counter lawsuits against them.

Analysts add that China will need to adopt an effective legal framework to end monopolistic practices in the technological field. The model to follow is that of the EU.

In December, the European Union presented a draft law listing what digital companies may or may not do, on pain of hefty fines or seeing their activities within the EU suspended.

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