Crime & Justice

China imposes more fines on tech companies

Shanghai, China, Jul 8 (EFE).- China announced a series of new fines on big tech companies, including Alibaba, Didi Chuxing and Tencent, for irregularities related to merger or acquisition agreements over the past decade.

In a series of statements issued on Wednesday night, the State Administration for Market Regulation (SAMR) revealed up to 22 fines of 500,000 yuan ($77,240) each, a very small amount compared to the multibillion-dollar revenues of the affected companies but the maximum allowed by China’s anti-monopoly law for such irregularities.

Out of the 22 fines, eight have been imposed on subsidiaries of Didi, referred to as the “Uber of China”, six on e-commerce giant Alibaba, and five on multinational technology conglomerate Tencent, developer of the popular social media platform, WeChat.

The regulator penalizes these companies for not adequately informing the authorities to approve the acquisition of parts of other companies or the establishment of joint ventures with their partners, although in some cases these operations occurred before 2018, the year in which the SAMR was established.

The penalties on Didi’s subsidiaries, including Huidi Tianjin, a platform for new energy vehicles operations, represent a new setback for the company after China suspended its application’s downloads due to an investigation that Beijing claims is aimed at protecting users’ privacy and data security as well as national security.

The company had made its Wall Street debut just two days before the regulators banned its app’s downloads in China, which have caused its shares to plummet almost 16 percent since then.

Chinese state-run newspaper Global Times hinted that the probe against Didi – and other similar companies that also recently went public in the United States – is due to the accumulation of a large amount of data related to national transport infrastructures by these firms, which poses a potential threat to China’s national security if leaked to other countries.

Since late 2020, Beijing has started a campaign to end common practices among Chinese big tech companies including “picking one of two,” a tactic used commonly in the e-commerce sector to force online merchants to choose one platform as their exclusive distribution channel, selling at lower prices to achieve a greater market share and the acquisition of other companies without the required authorization.

During this period, the country’s large tech firms have faced investigations and penalties such as the 18.2 billion yuan ($2.82 billion) fine imposed in April on Alibaba, the largest-ever antitrust penalty imposed by China.

For years, the technology sector had flourished in China not only due to the country’s huge market but also on account of lax regulations or their lack of enforcement, something that Beijing seems to have put an end to, especially since the last-minute suspension of the IPO of Alibaba’s subsidiary, Ant, which was expected to be the largest in history. EFE


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