September 30, 2023

A timeline of China’s 32-month Big Tech run that killed the world’s largest IPO and wiped out trillions in value

Chinese authorities launched a regulatory storm against the country’s Big Tech companies in late 2020 over concerns that the country’s major internet platforms would become too big and powerful.

Beijing’s discipline of the technology sector has wiped out trillions of dollars in market value from Chinese tech companies, kneecaping one of the most dynamic sectors in the world’s second-largest economy and accelerating the decoupling between the US and China. As a result, China’s big tech companies, which once rivaled their American counterparts in size, are now much smaller.

These are the key milestones of China’s Big Tech crackdown that kicked off 32 months ago.

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November 2020

An IPO by Ant Group, which would have been the world’s largest ever, was called off at the last minute in Shanghai and Hong Kong, sending shockwaves through the global investment community. The IPO was quashed after a controversial speech last month by Alibaba Group Holding co-founder Jack Ma. Ant is the fintech affiliate of Alibaba, which owns the South China Morning Post.

China’s financial watchdogs rushed to bring Ant’s operations under conventional financial regulation, forcing the tech giant to undergo internal restructuring.

Later in the month, Chinese authorities subpoenaed 27 major internet companies, including Tencent Holdings, food delivery giant Meituan, as well as TikTok owner ByteDance and Alibaba, to lecture them to correct alleged monopolistic practices, unfair competition and counterfeiting. China’s antitrust watchdog, the State Administration for Market Regulation (SAMR), has rushed out an antitrust directive to rein in internet-based monopolies.

December 2020

China’s top leaders stressed at the annual Central Economic Work Conference that the country must prevent the “disorderly expansion of capital,” a goal used to curb the influence and size of Big Tech. The message to investors and entrepreneurs was that the “barbaric” growth of China’s internet industry was over.

On Christmas Eve, the SAMR announced that it had officially launched an antitrust investigation into Alibaba.

Speaking at the Bund Summit in Shanghai on October 24, 2020, Alibaba co-founder Jack Ma Yun compared Chinese banks to pawnshops. Photo: WEIBO alt=In a speech at the Bund Summit in Shanghai on October 24, 2020, Alibaba co-founder Jack Ma Yun compared Chinese banks to pawnshops. Photo: WEIBO>

April 2021

China’s market regulator fined Alibaba a record 18.2 billion yuan ($2.8 billion), equivalent to 4 percent of its 2019 revenue, for abusing “its dominant market position in China’s online retail platform market since 2015”.

The antitrust authority then summoned 34 tech companies, including Alibaba, Tencent and Meituan, to a meeting and demanded that they “fully heed the warning of Alibaba’s case.”

July 2021

China’s market regulator began investigating merger cases from the early 2000s and fined big tech companies for failing to report certain deals to an antitrust investigation. It issued at least 22 fines of 500,000 yuan each — the maximum penalty allowed under China’s anti-monopoly law — against Alibaba, Tencent and ride-hailing giant Didi Global.

As a result, Big Tech M&A plummeted and companies began to divest past investments to shrink their balance sheets.

China’s powerful internet regulator, the Cyberspace Administration of China (CAC), also launched an unprecedented investigation into Didi for data and national security violations, two days after it launched a $4.4 billion IPO on the New York Stock Exchange . The move opened a new front in Big Tech’s crackdown, bringing Chinese IPOs to a halt in the US.

Didi was instructed to stop registering new users on the main app. Two months later, China’s data security law came into effect.

Signage at the Didi Global office in Hangzhou on Aug 2, 2022. Photo: Bloomberg alt=Signage at the Didi Global office in Hangzhou on Aug 2, 2022. Photo: Bloomberg>

October 2021

China fined Meituan 3.4 billion yuan for abusing its dominant market position by using what it called a “pick one out of two” practice that forced traders into exclusive deals. The fine was equivalent to about 3 percent of Meituan’s total domestic revenue of 114.7 billion yuan in 2020.

January 2022

China’s regulatory storm began to subside as authorities released a guideline promoting the “sound and sustainable development” of the platform economy. It reaffirmed Beijing’s commitment to tackling monopolies, unfair competition and misuse of data, but the document also struck a more positive tone by recognizing the role of Big Tech companies in the economy and encouraging their development.

May 2022

Vice Premier Liu He told some tech executives that the government would support industry development and public listings, boosting tech stocks and raising hopes that the worst of Beijing’s oversight is over.

July 2022

The CAC fined Didi Global 8 billion yuan for data breaches, ending the years-long investigation.

December 2022

President Xi Jinping addressed the Central Economic Work Conference in Beijing. The meeting concluded that internet platforms will be supported to “demonstrate their full capabilities” in stimulating the economy, job creation and international competition.

January 2023

Didi Global said it had resumed new user registrations for its ride-hailing app, following approval from the CAC.

That same month, Ant Group and 13 other platform companies said they have “essentially completed corporate rectification” under the guidance and oversight of financial regulators after being instructed to address several compliance issues in late 2020.

July 2023

Two and a half years after the government clamped down on Ant Group’s IPO, financial regulators fined the fintech giant a total of 7.1 billion yuan for violating rules related to “corporate governance and consumer financial protection”. The move was seen by industry experts as the end of China’s crackdown on the technol
ogy sector.

Chinese Premier Li Qiang later offered support to major technology companies at a symposium, while China’s powerful economic planning agency praised Alibaba, Tencent and Meituan for their contributions to the country’s growth and technological advancement.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit SCMP’s Facebook page Twitter Pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

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