China’s market regulator announced on July 10 that it has fined technology behemoths Tencent and Alibaba as well as a number of other companies for breaking anti-monopoly regulations regarding the disclosure of transactions.

A list of 28 transactions that broke the rules was published by the State Administration for Market Regulation (SAMR).

As reported, there were 5 Alibaba entities engaged, including a 2021 purchase of ownership in its subsidiary, the streaming service Youku Tudou. Additionally, 12 of the transactions on SAMR’s list involved Tencent.

One of the key targets of a campaign against monopolistic behaviour that began in late 2020 has been China’s tech industry.

China Anti-Monopoly Law

This law has undergone revisions after being approved by China’s top legislative body in June and it will go into effect on August 1.

It is believed that the amended anti-monopoly law will close some regulatory gaps regarding the abuse of market dominance, and also provide private companies with a clearer “bottom line” regarding illegal activities that jeopardise fair market competition.

A major revision of the law focuses on how to address the new challenges brought on by the development of the digital economy and properly regulate the platform economy.

A fair competition review mechanism will be established and improved by the amended law, and competition regulations that are compatible with China’s market economy will be developed and put into practice.

It is noteworthy that according to experts, major industry players can continue to expand in compliance with the law while adhering to the updated law’s additional regulation of the platform economy as a whole with standardised norms.

The revisions also defined the application of pertinent regulations aimed at the platform economy, such as operators cannot use data, algorithms, technology, capital advantage, and platform rules to participate in monopolistic actions, according to a draft version posted on June 16.

It also contained a “safe harbour” principle, which indicates that agreements between businesses with market shares below the threshold established by pertinent agencies won’t be prohibited.

The amendments were passed on at the 13th National People’s Congress (NPC) Standing Committee’s 35th meeting. Since China’s anti-monopoly law went into effect in August 2008, these are the first revisions.

As per the local reports, the State Council, China’s cabinet will be in charge of carrying out enforcement actions to create a unified, open, competitive, and orderly market system.

Tech Industry Crackdown

The tech industry in China has been one of the main targets of a campaign against monopolistic behaviour that began in late 2020, when Ant Group, a fintech affiliate of e-commerce giant Alibaba, saw its upcoming high-profile initial public offering in Hong Kong and Shanghai suspended by the regulators.

Following anti-monopoly investigations involving major internet companies like Tencent, Alibaba, Meituan, Didi Chuxing,, and Baidu, the government imposed administrative penalties in 98 cases in 2021. According to the anti-monopoly report for 2021 published by the top market regulator, a total fine of 21.74 billion yuan ($3.25 billion) was imposed.

However, the market’s high level of volatility since the start of the crackdown wasn’t surprising. Since the year 2020 ended, Alibaba’s market valuation has decreased by two-thirds. Didi’s app, which is still prohibited, lost more than 80% of its IPO value.

It was understood that there were ideological as well as political reasons behind the series of regulatory actions against Chinese homegrown tech giants and one of these reasons included the “Common prosperity” idea, introduced by Xi Jinping.

After Jinping’s speech in 2021, this campaign, which promotes moderate wealth for all and pushes the wealthy to give back more to society, has been a distinguishing feature of several initiatives.

The issue of wealth inequality has been made worse by China’s spectacular expansion in tech sector and because of that the Chinese authorities sought to prevent the sector’s growth.

At their peak, Alibaba and Tencent, both the companies had market capitalizations of over $800 billion each and it made them one of the top five companies in the world’s tech sector.

Since market power increases with growth, in China, many tech firms have a monopoly-like position in their own marketplaces. It became a huge worry that these corporations may eliminate smaller businesses and amass an excessive amount of influence. Beijing then began to see it as a major problem.

As a result in 2021, the government increased the vigilance with which it enforced its antitrust rules, fining numerous Chinese tech giants companies.

The Chinese government did not want to see too much wealth and power concentrated in fewer hands, and these enforcement actions sent a clear message to the market and the major internet companies about their practices.

Similarly, there were concerns about national security because many companies also retain a lot of their customers’ personal data. Beijing was concerned about what if foreign agencies or organisations could access such data.

So it was not a surprise that four days after its initial public offering on the New York Stock Exchange, ride-hailing giant Didi’s app was blocked by China’s cyberspace regulator due to suspicions of unauthorised user data collecting.

Now, even though several reports claimed that China has signalled to ease the tech crackdown, it was revealed that the Chinese market regulator SAMR has fined firms like Alibaba, Tencent and SoftBank 500,000 yuan ($74,700) each for breaking the Anti-Monopoly Law.

As reported, for failing to properly record more than a dozen acquisitions, the SAMR penalised a number of businesses in January, including Alibaba, Tencent, and Chinese video-sharing platform Bilibili, with a fine of 500,000 yuan per case.

It should be noted that the penalties are the highest permitted by the country’s current Anti-Monopoly Law.

All of the cases include mergers and acquisitions, such as Alibaba’s purchase of Best Inc, Tencent’s acquisition of Okaybuy (China) Holding Inc, and Ping An Healthcare And Technology Co’s formation of a joint venture with SoftBank.

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