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- 🔔 Why China is cracking down on Big Tech
🔔 Why China is cracking down on Big Tech
We've talked China before... 👇👇👇
Now we're going to talk China some more...
Specifically, why do China seem to hate their Big Tech giants?
Didi was the latest to feel the wrath of the regulators almost immediately after its U.S. IPO.
The charge?
“serious violations of laws and regulations in collecting and using personal information.”
Whatever that means.
And they're not stopping at Didi...
What's behind this?
Well, it's a bit of everything.
Genuine concerns about monopolistic practices & data security aside, it's hard to shake the impression that something deeper is in play.
Perhaps the 34 companies who have listed in the U.S. this year (raising a record $12.4bn) were rushing to get ahead of the regulators...
State media ran a critical piece on Didi's plans to IPO back in mid-June, so it can't have been any great shock when the notice came...
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It's often hard to understand Chinese decisions when looking in from the outside, so this opinion piece from within (Fang Xingdong: Chinese Internet companies need to make up "compliance" debts) is well worth a full read (Link is translated)
Here's a taster:
Obviously, this is our country's new progress in "strengthening anti-monopoly and preventing the disorderly expansion of capital", and it is also a new measure to implement China's cyber security system.
The call to end the barbaric growth of China's Internet has been around for several years. The so-called end of the barbaric era means that in addition to systematic rules and a good system, the system needs to be truly implemented to form a truly healthy order.
This time, the comprehensive activation of China's cyber security review mechanism indicates that Chinese Internet companies will officially bid farewell to the barbaric growth stage.
Establishing compliance awareness will become an important strategy for the development of Chinese Internet companies.
For all the talk of Chinese companies infiltrating Western entities it's easy to forget that it works both ways...
"China has restrictions on foreign investment in certain areas such as the Internet, news media, education, and finance.
However, through the VIE structure, foreign investment has bypassed many investment restrictions and has entered almost all areas of China's Internet."
Kendra Schaefer (Trivium) says that Beijing is breaking some eggs to make an omelette. It wants its internet companies to be compliant at home, and their first loyalties to be domestic - that's the prerequisite for going abroad.
It's not just about regulatory compliance. Media influence is also a big part of the equation.
Only one public opinion can be allowed...
China’s government has asked Alibaba Group to dispose of its media assets, as officials grow more concerned about the technology giant’s sway over public opinion in the country, according to people familiar with the matter.
Discussions over the matter have been held since early this year after Chinese regulators reviewed a list of media assets owned by the Hangzhou-based company, whose mainstay business is online retail.
Officials were appalled at how expansive Alibaba’s media interests have become and asked the company to come up with a plan to substantially curtail its media holdings, the people said. The government didn’t specify which assets would need to be unloaded.
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This is not a problem specific to China...
Remember this?
One big difference is that Chinese companies actually pay attention to their government...
Back to the point, recent CCP actions are aimed at bringing these big Tech companies back in line.
More regulation, a greater emphasis on toeing the party line (R.I.P. Jack Ma), and ensuring that power is never too concentrated in too few hands.
There can only be one monopoly in China: The CCP.
This thread is another good read, and highlights the evolution of the crackdowns, the emphasis on control. There will be more to come... 👇👇👇
A lot of tech development in China has been in the mode of "move fast and break things" (or "Shenzhen speed") and the war has been a war for territory on the idea platform size will eventually win in "winner-take-all" markets.
China has, sporadically, been taking aim at the— baufinanciaphaster 👹 (@bauhiniacapital) July 8, 2021
No wonder China's stocks are lagging the world...
BBG
Here's an overview of what's going on in markets (and that funny red colour next to stock indices) 👇👇👇
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