Apr 2, 2021 - Economy

Antitrust scrutiny is a growing concern for China's Big Tech

Illustration of a hand holding a magnet attracting large amounts of Yuan.

Illustration: Aïda Amer/Axios

Big Tech players in China like Alibaba, Tencent and Baidu are facing challenges all-too-familiar to Amazon, Facebook and Google.

Why it matters: Antitrust has become a big theme for Beijing and this could hamper growth of China’s tech sector should authorities decide to regulate with a heavy hand.

What's happening: Alibaba, which operates some of the world’s largest e-commerce platforms, has been under investigation for stifling competition and could be facing a fine of $1 billion or more and forced divestitures as an antitrust probe into the company continues, according to the Wall Street Journal.

  • Tencent, maker of the massive social and messaging app WeChat, recently paid a fine to antitrust regulators in China for failing to ask for approval on past acquisitions, and is still “actively cooperating with regulatory authorities.”
  • Baidu, the largest search engine in China, paid the same, relatively benign fine as Tencent for the same issue (not getting approval for a takeover).
  • Didi, China’s Uber, and TikTok owner Bytedance paid fines for not receiving approval to set up joint ventures, according to Bloomberg.

The big picture: China's ruling party does not want any one person (think Jack Ma) or entity to stand above it, but it's being careful in how it sends that signal.

  • The fines meted out so far have been slaps on the wrist, and aren’t existential threats.
  • But if the Politburo continues to increase fines, or decides to block future M&A deals or massive IPOs like Alibaba’s planned debut for its financial arm, Ant Group, these tech companies could lose out on opportunities to grow, which would weigh heavily on their stock outlooks.
Go deeper