BEIJING, June 22 (Reuters) - China is in the midst of an
extraordinary clampdown on its once-freewheeling internet
sector, with its competition regulator in particular dishing out
fines and warnings and conducting investigations into the
biggest names in the "platform economy".
The high-profile moves from the State Administration for
Market Regulation (SAMR) have included a record fine on
e-commerce giant Alibaba, an ongoing antitrust probe
into food delivery giant Meituan, and expected
penalties for social media and gaming giant Tencent.
In February, SAMR issued anti-monopoly guidelines that
target internet platforms. In April it summoned 34 companies
including Tencent, ByteDance and JD.com for a meeting,
ordering them to conduct self-inspections within one month and
warning of "severe punishment" for any that still violated the
Reuters reported exclusively in April that the newly
activist SAMR is adding staff and other resources to aid its
In addition to investigating and penalising specific
companies, it has also announced fines and warnings on entire
segments of China's online economy. In March, for example, it
tightened scrutiny over livestream shopping as well as community
Here are some of Beijing's highest-profile targets:
SAMR has begun an antitrust probe into Didi Chuxing, just as
the ride-hailing giant is pushing ahead with what could be the
largest initial public offering in the United States this year,
Reuters reported last week.
SAMR is investigating whether Didi used any competitive
practices that squeezed out smaller rivals unfairly, and whether
the pricing mechanism used by Didi's core ride-hailing business
is transparent enough, sources told Reuters.
Didi became dominant in China's online ride-hailing business
after years-long subsidy wars with Alibaba-backed Kuaidi and
Silicon Valley-based Uber's China unit, both of which
were merged into Didi.
China in April slapped a record 18 billion yuan ($2.78
billion) fine on Alibaba Group, after an anti-monopoly
probe found the e-commerce giant had abused its dominant market
position since 2015.
The fine, about 4% of Alibaba's 2019 domestic revenue, was
levied after SAMR determined that Alibaba had abused its market
dominance by preventing merchants from using other online
e-commerce platforms, a practice known as "choosing one from
The regulator also ordered Alibaba to make "thorough
rectifications" to strengthen internal compliance and protect
China torpedoed the $37 billion listing of Alibaba fintech
affiliate Ant Group in November after company founder Jack Ma
said during a now-infamous October speech that the country's
financial and regulatory system stifled innovation.
The dramatic suspension of the IPO came as Beijing grew
increasingly uncomfortable with banks using third-party
technology platforms such as Ant for underwriting loans amid
fears of rising defaults and a deterioration in asset quality.
Chinese regulators, led by the central bank, subsequently
imposed a sweeping restructuring on the fintech giant, forcing
it to turn itself into a financial holding firm, and to cut
links between its payments app Alipay and its other
The social media and gaming giant could face a penalty of at
least 10 billion yuan for not properly reporting past
acquisitions and investments for antitrust reviews, and for
anticompetitive practices in some of its businesses, SAMR has
informed the company, Reuters reported in April.
The regulator also told the tech giant that Tencent Music
should give up exclusive music streaming rights, and may
even be forced to sell the acquired Kuwo and Kugou music apps,
the Reuters report said.
SAMR also said in December it was looking into a merger
between game livestreaming firms Huya Inc and DouYu
International announced in October. Tencent is a major
investor in both and the Chinese tech giant had pushed the deal.
In April, SAMR launched an antitrust investigation into food
delivery giant Meituan, also focused on the "choosing one from
Meituan, which competes with Alibaba-backed Ele.me among
others, had an estimated 68.2% of China's food delivery market
in the second quarter of 2020, according to Trustdata.
In March, Meituan was among five backers or owners of
community group-buying platforms fined by SAMR over "improper
pricing behaviour" related to subsidies.
SAMR has been formally investigating whether KE Holdings
, China's biggest real estate broker, forces real estate
developers to list housing information only on its platforms,
another probe into the "choosing one from two" practice, Reuters
reported in May.
KE Holdings, backed by Tencent and SoftBank Group Corp
, was among dozens of internet companies warned in April
by SAMR against any abuse of market dominance.
China's market regulator said in February it fined online
discount retailer Vipshop Holdings Ltd 3 million yuan
for unfair competition.
An investigation found that from August through December
last year, Vipshop had developed a system to obtain information
on brands it and competitors sold which gave Vipshop a
($1 = 6.4696 Chinese yuan renminbi)
(Reporting by Yingzhi Yang; Editing by Muralikumar