Now in action: "anti-monopoly and preventing capital from expanding in a disorderly fashion"
Why? "With great power there must also come great responsibility."
Highlights:
1）Merely a weekend after the Politburo meeting calls for "anti-monopoly and preventing capital from expanding in a disorderly fashion", China’s antitrust regulator fines Alibaba and Tencent-controlled business, in a very public warning.
2）People’s Daily made another example on this by calling Chinese Big Tech off expansion into grocery shopping.
3）The billion-dollar question for Chinese Big Tech, as expected by Beijing and Main Street alike: can they deliver Sputnik-like tech?
***
The fine on three Chinese companies may be pocket change, but the signal carries real weight.
A little after noon Monday, China’s State Administration for Market Regulation (SAMR) issued a statement (CHN), saying that it is fining Alibaba, Tencent-controlled China Literature, and Hive Box half a million Yuan (about 77,000 USD) each for violating China’s antitrust law. Alibaba and Tencent are familiar names, and Hive Box is under SF Express, a premier logistics service.
In a follow-up and exceedingly lengthy Q&A (CHN) transcript, an unnamed SAMR official was quoted as saying that the three companies failed to declare their respective mergers to authorities.
Half a million yuan is the top fine for such an offense, according to current rules.
An investigation - apparently initiated by the SAMR since none of the three bothered to give official notice - found the mergers did not result in “excluding or restricting competition”, therefore did not result in the break-up of the mergers ex post facto.
Similar investigations have also been launched and the cases made public today are just three of them, according to the unnamed SAMR official.
The official also added that some of the companies under investigation - whether the three are among them are not explicitly specified - failed to cooperate fully.
Pekingnology (ENG) late on Friday took note of a Politburo meeting readout which demanded “reinforcing anti-monopoly and preventing capital from expanding in a disorderly fashion.” (强化反垄断和防止资本无序扩张)
Chinese authorities rarely, if ever, hand out huge fines on par with their Western counterparts, in part because that’s just what standing laws and regulations allowed.
While the light fine can be easily mistaken as a slap on the wrist, the penalty, in reality, carries much bigger weight, especially for those who are flirting with the rules, and more importantly, the principle laid out by the Politburo meeting.
In the Q&A the official described scenarios where companies MUST declare mergers to authorities, stressing that the merger MAY NOT proceed before being given a green light.
The measure aims at "preventing the formulation of monopoly through mergers, killing off competitors by buying SMEs and blocking innovation."
Big companies, such as the ones penalized today, have professional legal teams and are familiar with merger regulations, the SAMR hopes to make them into examples for the market, the official said.
The official also noted that the half-million yuan ceiling may change in future amendments of the antitrust law.
In conclusion, as our Friday newsletter pointed out, a few Big Tech now effectively controls the large trunk of Internet space in China, and the signal is crystal clear: tread carefully.
(The Q&A (CHN) should be vigorous read by those of you with a stake.)
***
And one area now flashing red is, well, grocery shopping - for the Chinese Big Tech hoping to transform this, People’s Daily says you have better things to do.
Inspired by grocery purchasing practices seen during the pandemic cordon sanitaire, Chinese Big Tech is looking to make “community group buying” (ENG) a staple to millions of Chinese families.
The catch? Your friendly mom and pop veggie stands may become obsolete.
Is China ready to swap veggie vendors with phone apps? Public opinion isn't so sure. And then there are those who are downright hostile to the idea, questioning if Chinese Big Tech is presenting a classic case of the haves preying on the have nots.
Riding on this public sentiment, and of course, Beijing’s apparent unease toward Big Tech, People’s Daily ran a commentary (CHN) Friday criticizing the latest gold rush.
除了对于菜贩群体利益深刻改变的讨论外，也有不少思考指向对大型互联网企业的创新期待。
Aside from discussion on the deep impact on the welfare of grocery vendors, people also expressed expectations for Big Tech to innovate.
It listed areas where China is still lagging behind, such as microchips, suggesting that Big Tech make good use of their wealth, resources, know-how, and shoulder the responsibility of technology innovation.
The bottom line in plain language:
别只惦记着几捆白菜、几斤水果的流量。
Don’t just keep your sight on the Internet traffic form a few batches of cabbage or few pounds of fruits.
***
Now you may have realized your Pekingnologists have covered both of the two parts of “anti-monopoly and preventing capital from expanding in a disorderly fashion.” (强化反垄断和防止资本无序扩张).
In essence, they point to the same thing: expansion in a disorderly fashion could very well end up being seen as becoming a monopoly.
But why? Here is some observation.
While Elon Musk rolls out revolutionary EVs off production lines, sending reusable rockets to space and Google claiming quantum supremacy for the first time in human history, Beijing and Chinese Main Street have not seen similar gigantic leaps in “real” tech from Chinese Big Tech.
The likes of Baidu, Alibaba, and Tencent have brought tremendous changes to the Chinese way of life in recent years--food, services, and connection just a tap away--but the Chinese people see these perks as conveniences, instead of leaps in “real” technology and innovation.
In the public's eye, the "real " tech companies such as Huawei and TikTok, are taking a beating from Washington, and are risking losing great swaths of the international market.
By comparison, the former BATs pales in terms of increasing China’s core competitiveness and championing China's image, so Beijing and the public are asking what they can do for their country, especially in kickass, Sputnik-like tech?
This newsletter is penned by Yang Liu, a contributor to Pekingnology, and Zichen Wang, the founder.