China’s tech crackdown: Antitrust body signals tighter enforcement in 2022 while promoting market development

The State Administration for Market Regulation will strengthen supervision of the platform economy, said agency head Zhang Gong
Authorities will also increase efforts to combat copyright infringement and counterfeiting

Law

Jane Zhang

Published: 6:00pm, 30 Dec 2021

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China’s top market regulator plans to tighten enforcement of antitrust and anti-unfair competition rules in 2022, the head of the agency said, signalling that the tech sector will continue to face government scrutiny after a year of forceful regulatory clampdown on the country’s Big Tech firms.

The State Administration for Market Regulation (SAMR) will “strengthen supervision and law enforcement in key areas such as the platform economy, technological innovation, information security, and the protection of people’s livelihood”, Zhang Gong told the state-run Xinhua News Agency in an interview published Wednesday.

Under Beijing’s forceful clampdown, China’s tech giants fell in line

The SAMR aims to further improve the country’s market regulations and guidelines in the coming year after “a series of positive developments” in promoting fair competition in 2021, said Zhang.

However, the SAMR will focus on in-depth system reforms rather than just individual cases, while promoting the stable development of markets, Zhang added.

The agency will also intensify efforts to combat copyright infringement and counterfeiting to safeguard the legitimate rights and interests of businesses and consumers, according to the article.

Zhang’s remarks come a year after the SAMR announced on Christmas Eve an antitrust probe into Alibaba Group Holding, which resulted in a record US$2.8 billion fine slapped on the e-commerce giant in April for monopolistic practices. In October, on-demand service provider Meituan was fined US$533 million for similar reasons.

These cases formed part of Beijing’s ongoing efforts to rein in the unfettered growth of the country’s tech behemoths, some of which have seen a dramatic plunge in stock prices in the past year amid mounting regulatory pressure.

The Hong Kong and New York shares of Alibaba, owner of the South China Morning Post, have halved in value this year. The stock prices of Hong Kong-listed Meituan and ByteDance rival Kuaishou Technology are down 50 per cent and 80 per cent, respectively, from their peaks in February.

Tech stock rout provokes trillion-dollar question: has China gone too far?

Meanwhile, China’s antitrust authorities have gained increasing prominence. The State Anti-monopoly Bureau, formerly the antitrust bureau within the SAMR, now reports directly to the country’s top leadership. In October, the bureau issued a job posting for 18 new hires, equal to about a third of its headcount of just under 50 at the time.

Amid economic headwinds exacerbated by sporadic Covid-19 outbreaks, however, Chinese leaders have stressed the importance of technological development in driving growth next year.

In a meeting in early December, the Communist Party’s Politburo emphasised the country’s drive for technological self-sufficiency and innovation, while shunning mentions of antitrust and the “disorderly expansion of capital” that 12 months ago kicked off a tumultuous year of crackdowns on the technology sector.

Speeding up the implementation of technology policies, tackling key technologies, and improving supply chain resilience are among Beijing’s top economic goals for the year ahead, according to meeting notes published by Xinhua.