China’s highly visible Internet giants, including Alibaba, Ant and Tencent, are generating a storm of government scrutiny and public skepticism, not unlike their American counterparts.
Highly successful Chinese and U.S. tech giants have a common problem: the power to generate massive revenue, control markets and dominate competition is no longer sitting well with the authorities or consumers. In addition, these companies have been known to routinely infringe the inventions and content at the expense of other businesses and many creators.
Beijing has move beyond finger-pointing at Silicon Valley Big Tech and has published a 22-page guideline, adding to a global antitrust trend from all points on the compass, including Japan, Europe and India.
New regulations have been proposed to curb “monopolistic platform practices” by internet companies, according to Bloomberg News and South China Morning Post. This comes after new microlending restrictions halted Ant Group’s potentially record-breaking $34 billion IPO. Beijing’s vaguely worded, document addressing antitrust regulations ignited a $290 billion equity selloff in November.
Reasons for the push-back differ somewhat. It appears that privacy and data collection is less of an issue for China, where government monitoring is largely accepted. Not accepted is the idea of Western-style monopolies run by billionaires aloof from the foibles of the global pandemic and the pain it is causing. They are making life more difficult for other businesses, as well as individuals.
“Emerging out of the Covid-19 recession, China got whacked by a K-shaped rebound,” writes Shuli Ren is a Bloomberg Opinion columnist covering Asian
markets. “The economy is running at two speeds: Large technology companies are thriving, while storefront businesses continue to struggle.
A year ago, e-commerce accounted for about 25% of total retail sales, now, it’s edging toward 30%. The pandemic has only exacerbated the discrepancy between online and offline.
This widening inequality doesn’t sit well with Beijing. To make matters worse, Big Tech has been aggressive and unwilling to share profits with small businesses on their sites. This strangely capitalist dilemma is one that Beijing – unlike the U.S. – can move quickly to quash.
Beijing and the Chinese people fear Big Tech as do the U.S. government and consumers. There is an eerie similarity about how in a decade or two of technology companies’ explosive growth they have achieved a pervasive hold on markets, data and wealth, and have evolved into something of a hydra-headed beast, no matter what political system they operate in.
“A growing number of people in China seem to feel the opportunities that people like [Alibaba founder] Mr. [Jack] Ma enjoyed are disappearing, even amid China’s post-coronavirus surge,” reports The New York Times. “While China has more billionaires than the United States and India combined, about 600 million of its people earn $150 a month or less.”
For all of China’s economic success, a long-running resentment of the rich, sometimes called the wealthy-hating complex, has long bubbled below the surface, says the Times. With Mr. Ma, it has emerged with a vengeance and the Communist Party seems willing to tap into that resentment.
‘The [Chinese] economy is running at two speeds: Large technology companies are thriving, while storefront businesses continue to struggle.’
China can shorten the leash on their tech behemoths by veritably pressing a button controlled by the Central Committee or President Xi. However, Beijing is likely too smart for that and there are subtler ways to achieve balance. Things are not so simple in the U.S. It remains to be seen if market forces – supported by the heretofore light hand of government regulation – can tame the already entrenched tech giants, their lobbies and powerful leaders.
It’s Not the Robots
“Even though they already largely cooperate with the central government on matters such as censorship,” reports Variety. “China’s tech companies are now so large and multi-tentacled that they have the potential to represent another source of power and organization in Chinese society other than the Communist Party-led government.”
In China, where there is little or no data privacy, public opinion and competition appear to be the issues. What is at stake is the appeal of billionaire entrepreneurs like Jack Ma, who have come to wield an uncomfortable level of authority for Beijing, and growing skepticism on the part of the Chinese people about abuses of their power.
Billionaires have not been a major concern for the U.S., with a history of yielding to their celebrity and influence, but the government and American people have grown skeptical about the size and reach of some technology businesses. It’s becoming apparent that it’s not the ‘robots’ we need to fear; it’s the businesses and governments that control them.
Image source: ca.finance.yahoo.com; chinainternetwatch.com (Imaginechina via AP Images)