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(Bloomberg) – China’s top leader has warned Beijing will tackle so-called ‘platform’ companies that have amassed data and market power, a sign that the months-long crackdown on the country’s internet industry is only doing to start.
President Xi Jinping chaired a meeting of the Communist Party’s main financial advisory and coordination committee on Monday, ordering regulators to strengthen oversight of internet companies, crack down on monopolies, promote fair competition and prevent disorderly expansion of the capital, according to the public channel CCTV. . Internet companies need to improve data security and financial activities need to be subject to regulatory oversight, CCTV also reported.
The unusually worded comments from Xi and his lieutenants suggest that Beijing is preparing to amplify a campaign to reduce the influence of its largest and most powerful private companies, which so far has mainly focused on Alibaba Group Holding Ltd. by Jack Ma and its subsidiary Ant Group Co. The term “ platform economy ” could apply to a plethora of mobile and internet giants that provide services to hundreds of millions of people , from giant Didi Chuxing to food delivery giant Meituan and e-commerce leaders like JD.com Inc. and Pinduoduo Inc..
“Some platform companies are developing in a non-standardized way and that presents risks,” CCTV said, citing the meeting report. “There is a need to accelerate the improvement of laws governing platform economies in order to address gaps and loopholes in a timely manner.”
Read more: China is pressuring Alibaba to sell media assets, including SCMP
The report came days after Bloomberg News reported that government watchdogs are now looking to Tencent Holdings Ltd.’s more than $ 100 billion financial empire. after ordering a redesign of Ant. Leading financial regulators see Tencent as the next target for increased scrutiny, according to people familiar with their thinking. Like Ant, Tencent will likely need to set up a financial holding company to include its banking, insurance and payments services, one of the people said, seeking anonymity as the discussions are private.
The two companies will set a precedent for other fintech players by complying with stricter regulations, the people added. Such a move would mark a significant escalation in China’s campaign to curb the influence of its tech moguls, which began last year with the scuttling of Ant’s initial $ 35 billion public offering and the publication of new antitrust regulations governing technology companies.
Read more: Chinese Politburo vows to boost anti-monopoly efforts
Tencent lost more than $ 65 billion in value within two days of the report, although its shares rose more than 1% on Tuesday.
The development of China’s platform economy is currently at a critical stage, Xi said at Monday’s meeting. There is a need to focus on the long term, strengthen weaknesses and create an innovative environment to promote the healthy and sustainable development of the platform economy, he added.
The semi-regular meeting of the Party’s highest financial oversight group usually helps set the tone and direction for national policy. At their last rally in September, Xi focused on the so-called “dual circulation” approach of relying on both international and domestic consumption and production to stimulate the economy.
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