Ever since China brought down the hammer on the incredible success story of Jack Ma last year, there has been a persistent question regarding the intentions of Beijing. Was it specifically motivated by Jack Ma stepping out of line? Was it to send a message to other Chinese tech giants that their joyride to the top was over? Or was there something deeper at play? More importantly, why now? To recap, last year, China made a last-minute move to health the IPO of Ma's fintech conglomerate Ant Group while also announcing a larger investigation of its parent company Alibaba. Commentators noted with concern that all this coincided with the disappearance of Jack Ma from the public sphere among a wave of unexpectedly bitter public criticism levelled against him. The last part was particularly puzzling to note for observers as Ma had always been a popular figure in China. A living representation of the wealth and success promised by the CCP if one were to work hard and stay within the lines defined by the party. Ma had become a cultural icon who was seen as being close to the power centre of China. And yet when the CCP turned on him, public rhetoric quickly flipped on him to label him as an 'evil capitalist'. Allegations were made that Ma and his company had used their power and influence to hold a monopolistic control over the market and that the CCP had interjected in the name of fairness.
But it was obvious to see that Alibaba had not recently become a monopoly. In fact, in 2014, at its peak, Alibaba controlled 80 per cent of the online retail market in China. Now with several other competitors such as JD.com, this monopoly is being questioned. Many of these same competitors have been lodging complaints against Alibaba with China's antitrust authority for quite some time as well before last year. So what changed? First, as some have pointed out, Jack Ma made the cardinal sin of criticising an aspect of the regulatory regime that is so central to all aspects of Chinese bureaucracy. Second, antitrust regulators have been monitoring Alibaba and similar Chinese tech giants for quite some time but have been reluctant to act for the fear of being seen as having a suppressive effect on the economy. Now, for whatever reason, they see little cause to hold back. Finally, there is the possibility that this clampdown was inspired by similar actions worldwide. Across the world, countries are steadily waking up to the realisation that tech giants have been allowed to benefit from what is self-regulation for quite some time and have now become problematically big and powerful and threaten the functioning and, in some cases, the authority of the governments themselves. Thus China is concerned about Alibaba the same way the US is concerned about Amazon. Beijing for its part simply appears willing to now go the extra mile to address concerns over big tech that the public may have. Interestingly, even in a country where the Government openly keeps tabs on the online activity of its citizens, usage of data by private companies is a major concern for Chinese consumers who have increasingly rallied against the practices of Chinese big tech. Another problem that regulators seem to now be targeting in China is that the bigger companies have now started establishing practices that make it harder for newer companies to break into their market, a sort of barrier to entry. Perhaps in direct response to a host of similar anti-competition practices, China recently released new anti-monopoly rules that are targeted towards tech giants. The rules cover a wide range of exploitative practices like price-fixing, restricting technologies and market manipulation using data and algorithms to name a few. This is not likely the last action that we are seeing from Chinese regulatory authorities in this period as they work to comprehensively tighten Beijing's leash on big tech.