Is Alibaba’s Fate a Warning to Other Chinese Tech Companies? The all page

BEIJING, KOMPAS.com – A number technology company China worried, after Alibaba fined billions of US dollars and his alliance forced restructuring, moment the Chinese government enforce new rules.

Chinese billionaire-owned e-commerce giant Alibaba, Jack Ma, was fined 2.8 billion US dollars (around Rp 41 trillion) by Chinese regulators last week, for being accused of abusing its market position over the years.

Then, on Monday (12/4/2021), the Chinese digital payments company, Ant Group, which is affiliated with Alibaba, announced a drastic restructuring plan.

The regulators forced the Ant Group to act like a bank rather than a technology company.

Furthermore, on Tuesday (13/4/2021), 34 technology companies located in China were summoned by officials and given a warning.

Also read: Accused of dominating the market, China fined Jack Ma’s company tens of trillions

“Let Alibaba be a lesson for you,” said the officials concerned warned, as quoted from BBC on Thursday (15/4/2021).

The 34 companies were given 1 month to “reflect” and comply with China’s new rules for platform companies.

Alibaba is arguably the grandfather of China’s tech industry. It dominates the market there with more than 800 million users from China.

Thus, it served as a warning to other companies in the technology sector, when Alibaba and its allies were fined and formally reprimanded.

Investigations into Alibaba determined that it had abused its market position for years, restricting merchants from doing business or running promotions on rival platforms.

The fines amount to around 4 percent of the company’s domestic income in 2019.

Industry players say, “everybody’s uptight”. Big companies worry they are next.

Companies, such as Tencent, JD.com, Meituan, Bytedance and Pinduoduo, have all looked at Alibaba’s experience, and are trying to avoid crossing the red line, from whatever Beijing has laid down.

Also read: Had an argument, the Chinese government now praises Jack Ma, apparently this is the reason

Nothing can be stronger

Alibaba’s fine is about increasing regulation in China’s vast tech sector, and for many, it’s a good sign that the market has matured.

“If you read the law, Chinese regulators are trying to look more and think ahead, in an effort to regulate an industry that is moving so fast,” said Rui Ma, a China technology analyst.

“They include the use of algorithms, not just market share. They try to understand the economy of the platform and try to match what the more developed countries are doing,” said Rui Ma.

However, the move was also seen as a political move.

It is indicated that below Presiden Xi Jinping, there is nothing bigger or stronger in the lives of ordinary Chinese people, other than the Communist Party.

These companies have created an alternative virtual world for the Chinese people, and are very much in charge of their lives. People can’t get through the day without accessing one of their Chinese apps.

Also read: Reportedly missing, Jack Ma appears in the 50-second video

But the same influence over the lives of the Chinese people puts them in direct competition with the Chinese Communist Party.

Sources in China’s financial circles told BBC that they suspect it “irritates many of the top leaders in Beijing.”

Because, Chinese tech father Jack Ma gave a speech that rejected the traditional banking sector last year.

The speech led to state media criticizing the businesses of Ma, Alibaba and Ant Group. Later, Ma and his team were summoned by regulators and the much-anticipated Ant stock market launch was postponed.

Analysts say what Ma said at the symposium cost him a lot.

Clearly, both Ant and Alibaba are interested in drawing a line under these events.

In an investor call this week, Alibaba’s executive vice chairman, Joe Tsai said, “From a regulatory point of view … In our case, we have experienced scrutiny and we are happy to resolve this issue.”

He added, “I think in the future, the global trend is that regulators will be more interested in looking at some areas where you can experience unfair competition.”

Also read: China is expected to take over Alibaba and Ant Group from Jack Ma

The birth of Chinese technology

Technology company China was born and raised in an environment with little or no regulation.

This sector operates, like the Wild West, with a “build and they will come” philosophy. For a long time the government has been actively encouraging this.

“China has a national scheme to promote entrepreneurship and innovation,” Angela Zhang, professor at the University of Hong Kong told me.

He is a Chinese jurist and is the author of a recent book entitled Chinese Antitrust Exceptionalism.

“In the past, regulators were a little more negligent in their approach. They used alternative, more lenient regulatory tools for technology companies,” said Angela Zhang.

However, that regulation changed when China tried to control these companies.

Also read: The fate of Jack Ma is unknown, speculation also develops

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