• Internet platforms not outside of antitrust laws: Regulators
  • A week ago, regulators grounded Ant Group's $35-billion IPO
  • New rules by regulators for internet transactions will be released by June 2021

Upsetting China’s super-rich and its investors alike, the communist nation is stepping up efforts to control some of its biggest technology companies in a bid to weed out antitrust practices.

On Tuesday, Beijing announced new regulations to curb monopolistic practices in the internet industry and reduce the influence of big corporations like Alibaba and Tencent in the market, Bloomberg reported.

This comes a week after Beijing put new restrictions on the financial markets and in turn, suspended the $35 billion IPO of the Ant Group, which was expected to be the largest on the planet. It also resulted in Alibaba’s shares falling 7% in Hong Kong, as per the report. Stricter regulations may cost Ant more than half of its valuations according to analysts.

With the new regulations, Beijing seeks to create a framework, wherein anti-competitive practices can be stopped. These practices include sharing customer data and mergers and acquisitions that push new rivals out of the market. Under these new rules, tech companies in China may also have to apply for specific operating approval to attract foreign investment.

The new rules have led the stock market to spiral and Chinese equities have witnessed a massive selloff ever since. Before the regulations kicked in, Alibaba, Tencent and Ant were China’s most valuable companies, easily beating state-owned bodies like Bank of China.

The Tencent group fell 6% Wednesday in Hong Kong after dropping 4.4% on Tuesday. Meituan, another valuable startup in China, lost 6% Wednesday after tumbling over 10% Tuesday.

This comes amid an increased crackdown on big tech companies worldwide, including Facebook and Google, that are facing antitrust lawsuits before the U.S. authorities. Customers around the world have recently begun to protest the invasion of privacy from technology companies.

Hoi Tak Leung, a Hong Kong-based lawyer, told Bloomberg, “There seems to be a broader China government sentiment that internet platforms are becoming too powerful. This would be consistent with worldwide developments as well.”

Earlier in November, representatives from 27 major Chinese tech companies, including Alibaba and ByteDance, met with antitrust regulators to discuss related issues. After the meeting, regulators said in a statement that internet platforms are not outside of the reach of antitrust laws.

The tech companies may not be able to relax yet as Beijing plans to release new rules for internet transactions by June 2021.