Alibaba (9988) and Meituan (3690) are facing new regulations for their online consumption platforms as China published draft rules aimed at preventing monopolistic behavior by internet platforms.

The State Administration for Market Regulation yesterday announced detailed regulations for the first time to root out monopolistic practices in the internet industry - a move that will increase scrutiny on e-commerce marketplaces and payment services belonging to the likes of Alibaba.

The country's antitrust watchdog is seeking feedback on a raft of regulations that establish a framework for curtailing anti-competitive behavior such as colluding on sharing sensitive consumer data, alliances that squeeze out smaller rivals, and subsidizing services at below cost to eliminate competitors, reported Business Standard.

Alibaba and Tencent (0700) both suffered a more than 4 percent drop in Hong Kong, hurt also by a broader tech selloff.

China's second-largest e-commerce company JD.com fell as much as 8.9 percent, its steepest intraday fall on record. Meanwhile, Meituan was down by more than 12 percent, the biggest intraday decline since November 2018.

Tencent founder Pony Ma Huateng relinquished his role as Tenpay's legal representative after the draft rules were issued, just days after Tencent subsidiary Shenzhen Tenpay Network Finance Microfinance increased its registered capital by 150 percent from 1 billion yuan to 2.5 billion yuan last Wednesday.

China's central bank and regulators have issued draft rules last Monday to boost oversight of online microlending as it tries to rein in rising debt levels in the coronavirus-hit economy, according to a Reuters report.

The draft rules from the People's Bank of China and the China Banking and Insurance Regulatory Commission seek to increase the bar for micro-lenders to be able to provide online loans directly to consumers or jointly with banks while limiting the amount they can lend.

Chinese banks' consumer loans sourced via tech firms reached 1.43 trillion yuan (HK$1.66 trillion) at the end of June, said the PBOC.

Alibaba's shares fell more than 4 percent yesterday. REUTERS

China bids to end tech giants' monopolies