Xi tightens grip on tech giants

When mainland tycoon Jack Ma Yun last appeared virtually at a ceremony awarding outstanding teachers for educating children in poor regions, he seemed to have managed to land softly after hitting turbulence over the Ant Group, an Alibaba affiliate. But did he? Observers may now be seeing this with...

Mary Ma

Wednesday, March 17, 2021

When mainland tycoon Jack Ma Yun last appeared virtually at a ceremony awarding outstanding teachers for educating children in poor regions, he seemed to have managed to land softly after hitting turbulence over the Ant Group, an Alibaba affiliate.
But did he?
Observers may now be seeing this with less confidence in light of recent news reports.
These include CCTV's high-profile broadcast of President Xi Jinping's warning to regulate so-called "platform" companies which have amassed data and market power, and the Wall Street Journal report that Alibaba is under pressure to sell its media properties - including the South China Morning Post.
As Xi chaired a financial advisory and coordination committee meeting on Monday, he ordered his regulators to step up supervision of internet giants with a view to cracking down on monopolies, promoting competition and preventing disorderly expansion of capital.
It wasn't the first time the country's top leader ordered a crackdown on internet giants. The last time the crackdown was ordered it led to the last-minute disruption of Ant Group's public listing move in Hong Kong and the mainland.
However, it was rare for Xi to say so openly. It was thought to be the first time that the president had made such a dire warning so publicly.
Given his strongly worded statement, it is all but certain that the storm is far from over for Alibaba and its technology peers.
A recent Bloomberg report said another tech giant, Tencent, is now in the crosshairs of government watchdogs in the mainland.
In view of Xi's warning that was broadcast nationwide, other tech giants - including ride-hailing giant Didi Chuxing, food delivery platform Meituan and mainland e-commerce leader JD.com - could be the next to be affected.
The accusation that Alibaba has amassed too much influence through its media outlets may be puzzling to some because the expansion was consistent with the country's policy back then to assert the mainland's soft power internationally.
Of all the media assets owned by Alibaba, the SCMP is undoubtedly the most notable as far as Hongkongers are concerned.
According to the WSJ report, Beijing is now asking Alibaba to give up its media assets, including the SCMP. Although its chief executive reiterated Alibaba's commitment to the SCMP, the reported development is bound to create uncertainty for the newspaper.
It may be recalled that, when Alibaba bought the daily from the Kuok family, the transaction was said to be part of Beijing's policy to acquire international media organizations to project China's image to the rest of the world.
Now, if the report is true, the acquisition seems to have reversed to become a concern for Beijing leaders that these media assets could be used in ways contrary to the interests of the leadership.
There is no doubt that the tech giants - or platform companies - will come under mounting pressure as the regulatory storm continues.
This may also be reflected in their share prices.