Beijing Tightens Political Control of Internet Giants

The ruling Communist Party is tightening political control over China’s internet giants and tapping their wealth to pay for its ambitions to reduce reliance on U.S. and European technology.

 

Anti-monopoly and data security crackdowns starting in late 2020 have shaken the industry, which flourished for two decades with little regulation. Investor jitters have knocked more than $1.3 trillion off the total market value of e-commerce platform Alibaba, games and social media operator Tencent and other tech giants.

The party says anti-monopoly enforcement will be a priority through 2025. It says competition will help create jobs and raise living standards.

The CCP Chairman Xi Jinping’s government seems likely to stay the course even if economic growth suffers, say businesspeople, lawyers and economists. “These companies are world leaders in their sectors in innovation, and yet the leadership is willing to squash them all,” said Mark Williams, chief Asia economist for Capital Economics.

Chinese leaders  are worried about is companies getting too big and too independent of the party, said head of the Beijing office of law firm WilmerHale Mr. Lester Ross.

Chinese internet companies and their billionaire founders, including Alibaba Group’s Jack Ma and Tencent Holdings’ Pony Ma, are among the biggest global success stories of the past two decades. Alibaba is the biggest e-commerce company, while Tencent operates the popular WeChat messaging service.

But party plans emphasize robots, chips and other hardware, so these companies are rushing to show their loyalty by shifting billions of dollars into those.

The ruling party’s campaign is prompting warnings the world might decouple, or split into separate markets with incompatible technology. Products from China wouldn’t function in the United States or Europe, and vice versa. Innovation and efficiency would suffer.


CCP Tightening Control Over E-Stores

Meanwhile, Xi’s government is tightening control over data gathered by private companies about the public — especially at Alibaba and Tencent, which have hundreds of millions of users. China’s leaders see information about its 1.4 billion people as a tool for gaining insight into the public and economy — and a potential security risk in private hands.

A law that takes effect Nov. 1 establishes security standards, prohibits companies from disclosing information without customer permission and tells them to limit how much they collect. Unlike data protection laws in Western countries, the Chinese rules say nothing about limiting government or ruling party access to personal information.

Beijing also is accused of using its stockpile of data about the public in a campaign of repression against Uyghurs and other mostly Muslim minorities in China’s northwestern region of Xinjiang.

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