Baidu, Alibaba Tencent, and Xiaomi are the four largest tech companies in China (often referred to as BATX). Baidu is a search engine and related services company; Alibaba is a leader in online retail and e-commerce; Tencent is a social media and gaming platform; and Xiaomi produces phones and other products.
BATX dominates its competitors, just like their Silicon Valley counterparts Google (or GAFA), Amazon, Facebook, and Apple. The data-driven online business is driven by network effects, which are a huge factor.
BATX (again like GAFA), is also known to gobble up competitors. Tencent , according to, made 168 acquisitions or investments in both domestic and foreign companies. Alibaba has made 44, Baidu has 43 and Xiaomi has 70.
The crackdown on tech
The Chinese government has increased its scrutiny of BATX over the last 18 months.
An IPO for Ant Group was cancelled in November 2020. Ant Group is an affiliate of Alibaba. Ant Group had to restructure when Chinese regulators “interviewed” the company’s founder.
Jack Ma, Alibaba’s co-founder, has been keeping a low profile ever since the government intervened in his company in late 2020. Chinatopix / AP
Following the month, Alibaba’s Ali Investment and Tencent’s Literature Group each received fines of RMB 500,000 ($110,000 A$) for anti-competitive purchases and contractual arrangements.
The General Administration of Market Supervision of China opened a case in which it accused Alibaba of abusing its dominant position on the market for online retail platform service.
Tencent and Baidu were among the companies that received fines in March 2021. They were each fined RMB 500 000 due to anti-competitive agreements and acquisitions.
Read more: Facial recognition for gamers, app store bans for Didi: what’s behind China’s recent crackdown on big tech?
Then in April 2021, Chinese authorities met with 34 platform companies , including Alibaba and Tencent, to provide “administrative guidance sessions” for internet platforms. That month Alibaba was also fined a spectacular RMB 18.228 billion (around A$4 billion) and Tencent another RMB 500,000 for anti-competitive practices.
Chinese authorities banned in July 2021 a merger of two companies, which would have further consolidated Tencent’s gaming market position.
The government is continuing its efforts. This week, regulators issued new fines to Alibaba, Tencent, and other for breaking anti-monopoly laws about disclosing specific transactions.
What motivates Chinese authorities to act?
China’s digital giants show how “winner-take-all” markets operate in both state-managed economies and capitalist ones.
BATX now has significant economic and social power in China. This is in conflict with China’s commitment to a state-managed society.
In January 2022, President Xi Jinping requested stronger regulation of China’s digital industry. He said the goal was to prevent “unhealthy development” and “platform monopoly, and disorderly growth of capital”.
Xi Jinping, the Chinese president, has called for stronger regulation of digital economy. Mark Schiefelbein / AP
It is impossible to create a social order by state-orchestrated means when there is a large accumulation of private power.
China’s digital agenda is designed to promote strong economic growth. The Chinese Communist Party also seeks a strong state control to maintain the structure and functions of digital markets, and their participants in order to ensure that they operate according Chinese values and Chinese Communist Party goals.
What can we learn about China’s approach towards ‘big technology’?
How can we regulate the digital platforms to enhance competition and public oversight, in particular? This is a major public policy issue that has not been solved.
Australia and the EU have shown a willingness to tackle this issue, just like China.
Policymakers in Europe, where US platforms are dominant, are actively working to achieve autonomy from foreign technology companies. This is done by improving the technology capabilities of their countries and imposing regulations for data management and content moderating in line with European norms and values.
Read more: China’s tech and finance crackdown is a challenge to Western ideas that Cuts across the developing world.
While the EU and China are aiming at very different goals, both are willing to take a significant role in regulating digital platforms in accordance with their stated economic, political, and social values.
This is in stark contrast with the US situation, where there has been little appetite to regulate the behavior of tech companies meaningfully meaningfully.
The centralized political power of China theoretically allows it to experiment with different approaches to platform regulations. It remains to be determined whether Chinese authorities will be able to combat the tendency of digital markets to become monopolized successfully.