(Excerpted from South China Morning Post accompanied by data compiled by Viet Hustler)
Originating from the forced cancellation of Ant Group's IPO in November 2020, Chinese authorities initiated a storm sweeping through Big Tech companies over 2.5 years…..
…. simply due to concerns that internet platforms here were growing beyond the state's control (image below).
Beijing's tightening on the technology sector has wiped out trillions of USD in market value (image below), paralyzing one of China's most dynamic sectors and… accelerating the US-China economic decoupling in technology.
As a result, China's major technology companies, which once had scales competing with US rivals, have now shrunk considerably.
Key milestones in China's major tech crackdown from November 2020 to July 2023 are summarized below:
November 2020
Ant Group's IPO plan (once predicted to be the largest IPO ever) was canceled at the last minute in Shanghai and Hong Kong…
… after Jack Ma's controversial speech earlier (comparing Chinese banks to pawnshops).
Ant Group is a fintech company under Alibaba, owner of South China Morning Post.
China forced Ant Group to undergo “internal restructuring” and summoned 27 major internet companies (including Tencent Holdings, ByteDance and Alibaba…) for a warning meeting on tech monopoly behavior.
China's State Administration for Market Regulation (SAMR) hurriedly issued guidelines on anti-monopoly for the internet.
December 2020
China's Central Economic Work Conference emphasized managing and limiting the influence and scale of Big Tech.
Subsequently, SAMR announced that it had officially launched an antitrust investigation into Alibaba.
April 2021
Alibaba was fined CNY 18.2 billion (~USD 2.8 billion ~ 4% of Alibaba's 2019 revenue), for the charge of “abusing its dominant position in China's online retail platform service market since 2015”.
34 other tech companies were also warned.
July 2021
China officially opens the Big Tech crackdown front, particularly blocking Chinese companies' IPOs in the US:
Chinese market regulators began reviewing M&A records from the 2000s…
…. and fined Big Tech companies for failing to report some M&A deals that could lead to monopoly.
=> Big Tech's M&A activities dropped sharply compared to the previous period (image below) + Chinese tech companies began divesting to shrink their balance sheet sizes:
China's Cyberspace Administration (CAC) began investigating Didi for data and national security violations,…. just 2 days after Didi's USD 4.4 billion IPO on NYSE.
October 2021
Meituan was fined CNY 3.4 billion (~ 3% of Meituan's 2020 domestic revenue) for exclusive deals.
January 2022
China eases up in the Big Tech crackdown:
At that time, Chinese leaders repeatedly emphasized the role of Big Tech in China's economy….
…. but still stressed the government's commitment to combating internet monopolies.
May 2022
Vice Premier Liu He stated to Big Tech CEOs that the government would support the development of this sector and public listings…
=> sparking hopes that Beijing's oversight of Big Tech companies had ended.
July 2022
CAC fined Didi Global CNY 8 billion after a 1-year investigation.
December 2022
Once again, China signaled continued support for internet technology companies…
… as expressed in Chairman Xi Jinping's goodwill speech at the Central Economic Work Conference in Beijing.
January 2023
Didi Global resumes new user registrations for its ride-hailing app after CAC approval.
Ant Group and 13 other platform companies announced “completion of business operation rectification” under regulatory supervision.
July 2023
After 2.5 years since Ant Group's massive IPO was abruptly canceled, Ant Group was fined a total of CNY 7.1 billion.
This is seen as the milestone marking the end of China's crackdown on the technology sector.
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