Why Beijing is taking a shot at its tech conglomerate
In today’s China Report, the Echo World News section has a story titled “Why Beijing is taking on its tech conglomerates”. Jack Ma, founder of Alibaba, is not the only big Chinese business owner to appear to be the only one suffering on Calvary Cross Road, the report notes. After long turning a blind eye to the practices of tech giants, the Chinese government is now determined to bring them back into line and back under government control. This comes with an accompanying goal of increased surveillance of the private sector by the Chinese Communist Party.
A blue-shirted, white-trousered Jack Ma sat modestly in the depths of the hall at the annual family gathering of employees in Hangzhou on May 10, though such rare appearances certainly did not go unnoticed. The founder of China’s economic leader, Alibaba, whose founder Jack Ma has rarely appeared in public since his key Alibaba financial institution, the Ant Financial Group, went public and was wildly shellacked by the Chinese government last November. His criticism of China’s financial regulator, which he likened to a “club for retired old men” after prompting the downfall of the self-taught billionaire, was once a symbol of success in the digital economy on behalf of the country.
Jack Ma’s empire is henceforth in the sights of the authorities, walking the path of the cross of persecution and repression, who subsequently fined Alibaba 2.3 billion euros for allegedly abusing its dominant market position. No conglomerate has ever been fined so much in China!
Huge fines
If Jack Ma’s reputation and his criticism of the Chinese Communist authorities can explain this situation he has gotten himself into, Beijing’s approach does not stop there. As Ernan Cui, an analyst at Gavekal Consulting in Beijing, put it: “Alibaba is just an aperitif”.
The purge is blowing on all of China’s tech giants. As proof, Tencent, the owner of the universal WeChat app, which has more than a billion Chinese customers, should also soon be hit with a hefty fine by authorities on antitrust charges. Communist authorities, in total, have asked at least 34 major Internet platforms to quickly re-examine their business practices or face disciplinary sanctions.
After long turning a blind eye to the practices of these Chinese digital giants, Beijing is now moving in all directions to fix them, the report noted.
State authorities are now more sensitive to the use of data, the use of personal data collected. This approach is designed first and foremost to respond to the legitimate need to regulate the Internet and better protect consumers. For years, some e-commerce giants have abused their dominant position to force merchants into exclusive partnerships for major promotions.
But Beijing’s interests don’t stop there. Having blown the whistle on the end of easing, the Communist regime also intends to put its foot in the door of these digital technology conglomerates and expand the government’s influence among them.
This offensive is part of a larger framework: the all-powerful President Xi Jinping is stepping up pressure on all fronts, and the private sector is no exception. Let Some People Get Rich First! 40 years after Deng Xiaoping’s campaign to the Chinese in the early days of China’s economic reform and opening up, Xi Jinping pointed out to these people that “you must be loyal to the Communist Party of China and not forget that the Party gave you your wealth”. Faced with Ma’s overconfidence in himself, Xi Jinping showed Ma without delay “Who is the boss! .
Should we see Xi’s desire to break the Internet giant at this turning point, the Echo notes? Of course not!
The digital technology product economy contributes two-thirds of China’s economic growth, and Beijing is well aware of the contributions of the Internet giants. But these companies want to continue to prosper and must now prove that they can preferentially choose to contribute to the Communist regime.
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