Chinese tech shares drop after Beijing tightens competition rules
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Shares in Chinese internet groups fell after the country’s market regulator said it would tighten antitrust and data restrictions on platforms, marking the latest stage of Beijing’s crackdown on the sector.
The State Administration for Market Regulation, China’s antitrust watchdog, released draft rules on Tuesday banning unfair competition among internet companies, in a move that could sharply intensify government oversight of the country’s leading tech platforms when they are adopted this year.
Shares in Chinese internet and ecommerce groups Alibaba, Tencent and JD.com fell 2 per cent, 3 per cent and 4.6 per cent, respectively, in Hong Kong trading following the announcement.
China’s market regulator has escalated demands in recent months for “self-rectification” from dozens of internet companies, including ride-hailing platform Didi Chuxing, which has become a particular target of regulatory scrutiny following its US listing in June. In April, the SAMR handed Alibaba a record $2.8bn fine for abusing its market dominance. The crackdown has shaved billions of dollars worth of market value from China’s tech sector.
Angela Zhang, an expert on Chinese antitrust legislation at the University of Hong Kong, said the measures would target practises including false advertising, fraudulent online reviews, unfair competition, interoperability issues, data protection and consumer privacy issues.
The draft rules, which may be revised after a consultation period, banned groups from widespread practices such as exploiting user data to learn how customers behave and influence them to not choose competitors’ products or services.
Limiting traffic to other platforms by practices such as blocking hyperlinks to rivals, or using fake transactions or reviews to damage competition, would also be prohibited.
The rules announced on Tuesday allowed “SAMR to take much nimbler action to tackle various regulatory issues arising from the platform economy”, added the University of Hong Kong’s Zhang.
The Chinese Communist party has made antitrust regulation central to a broad campaign to limit behaviour by internet groups that it considers damaging to social stability and national security.
Analysts said the campaign has been driven in part by user anger over perceived exploitation by powerful internet companies.
Chinese lawmakers are planning to revise the country’s anti-monopoly legislation this year.
The vast troves of user data held by internet companies were propelled to the forefront of the regulatory crackdown last month after the Cyberspace Administration of China, the cyber security watchdog, announced an investigation into Didi days after its blockbuster New York listing.