China tightens its grip on technology companies through Jack Ma, sent notice to 34 big companies
The recent attacks by the Chinese government on Jack Ma will not be visible in a few weeks. But it is certain that the entire technology industry of the country has got the eye of the government. The government first imposed a record $2.8 billion (Rs 21,057 crore) fine on Alibaba for misuse of authority. The Ant Group then issued an order to change the business structure of the company.
Notice to 34 big companies of the country: On Tuesday, Chinese regulators sent notices to 34 large companies of the country. The notice was sent from Tencent to Tiktok’s owner ByteDance. It has a clear message – stay in the limit. This means that the gallop of expansion going on for years in the Internet world of China will stop. Giants like Alibaba, Ant or Tencent will not be able to bully small companies with data and financial strength.
Decline of buying and selling of companies: According to Mark Tanner, the founder of Shanghai-based China Skinny, there is a warning of tying the Ant to the rules and a fine of billions on Alibaba, keeping the rest of the expansion plans under control. There, the purchase of other companies from Internet giants will be reduced and the rules will increase. Ant has to separate the country’s largest payment service from the consumer lending business.
The path of growth of veterans will be sluggish: Giants like Tencent and Meituan will also have to slow down their progress on the path of growth. However, there has been no strictness from the government against both these issues. In the beginning of the last decade, Alibaba’s Jack Ma and Tencent’s Pony Ma made an internet empire in the country by entering the telecom sector from retail. But their monopoly on the market and its misuse used to alarm the government and regulators.
Jack did a stinging comment during Ant’s IPO: Prior to Ant’s record IPO in November 2020, Jack Ma commented on banking regulators. After that the phase of action started, the condition of his Tech Empire started deteriorating. Since October, Alibaba’s valuation has come down by $200 billion (Rs 15,03,870 crore).
How will Tencent go to Meituan: Giants such as Tencent to Meituan are also likely to take action soon due to their dominance in the field. The community may get stuck due to the business practice of signing an exclusivity clause from Meituan Merchant, which is expanding in the field of e-commerce.
The valuation of the Ant reduced by six times
The Alipay payment service may have an adverse impact on Jack’s group’s business prospects due to an incorrect connection with Ant’s other product. At the time of IPO, its valuation of more than 30 times can be 5 times as much as other banks today. Jack’s company will have to apply and register before starting any new financial service, which can get caught in the bureaucracy.
