Technology behemoths Alibaba Group Holding Ltd (NYSE: BABA) and Tencent Holdings, and other companies have been fined by China’s market regulator for breaking anti-monopoly regulations regarding the disclosure of transactions.
Alibaba was fined 500,000 yuan for breaking anti-monopoly rules
China’s State Administration for Market Regulations (SAMR) published a list of 28 transactions that broke the rules. Among the listed firms are five of Alibaba’s subsidiaries, including last year’s equity acquisition of its streaming service subsidiary Youku Tudou. Twelve of the deals on SAMR’s list involved Tencent. The companies were not immediately available for comment.
One of the key targets of a campaign against monopolistic behavior that began in late 2020 has been China’s tech industry. The maximum possible fine in each instance under the anti-monopoly statute is 500,000 yuan ($74,688). The fines are the highest allowed in the country under the Anti-Monopoly Law. The cases include acquisitions and mergers like Alibaba’s acquisition of Best Inc and Tencent’s purchase of Okaybuy (China) holding Inc.
A lot of Chinese tech companies hold a monopoly-like status in their respective markets. It became extremely concerning that these firms would obliterate smaller companies and gain an overwhelming amount of power. Beijing then started to consider it a serious issue.
Chinese government tightened antitrust laws enforcement in 2021
As a result, the government tightened its enforcement of antitrust laws in 2021, fining major Chinese tech behemoth firms.
These enforcement measures sent a clear message to the Chinese leadership that it didn’t want to see too much money and power consolidated into a small number of individuals.
Similar to this, there were worries regarding national security due to the fact that many businesses also keep a lot of client data on file. Beijing was worried about what might happen if these data were accessible to foreign agencies or organizations.
Therefore, it came as no surprise when China’s internet regulator stopped Didi’s app four days following the ride-sharing giant’s maiden public offering on the New York Stock Exchange due to concerns about unauthorized user data collection.