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Aug 6, 2021 11 min read

China's Big Tech Crackdown

China's Big Tech Crackdown
Photo by Li Yang / Unsplash

🔒 Over last 40 years, China has been steadily and systematically reshaping itself into a market economy. Whilst the Western narrative is of an authoritarian surveillance state, the reality is that China has been strategically building a technology infrastructure for a 21st-century digital economy.

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China Reins in Big Tech

China’s Big Tech giants have built massive monopolies with flywheel network effects to power China's digital economy. This is best illustrated in the way that the country’s payment system has moved from cash to cashless, with Ali Pay and WeChat Pay dominating.

(Read this article and interview with expert Richard Turrin about China's transition to a cashless society 🔒)

After a decade of a hands-off approach to China Tech, especially in financial services and e-commerce, China has decided its time to take action. In no small part, by looking at the power and influence of the Big Tech monopolies in the United States and saying "this ain't happening here".

It started late last year when Chinese regulators pulled the plug on Ant Group's massive IPO at the 11th hour.


Ant Group is part of the Alibaba Group, a Chinese multinational e-commerce, retail, and financial services technology company often called the "Amazon of China". Ant includes Alipay, the largest Fintech company in the world.

Last November, Alibaba was forced to scrap the Ant IPO at the last minute. The floatation was expected to raise $37 billion and value the company at over $300 billion.

This state intervention appears to have been instigated after Alibaba founder Jack Ma, the richest man in China, gave a speech. The Speech.

The Speech was on October 24th and Ma pulled no punches. He was openly critical of China's financial services industry, likening it to "an old people's club." He also criticised regulators and Bejing.  

A week later, the Shanghai Stock Exchange forced the cancellation of the IPO.

Alibaba's stock immediately fell 8% on this news, which cost Ma over $3 billion in value. Ma then disappeared from the public eye and has hardly been seen since, fuelling a ton of conspiracy theories!

What Really Happened To Jack Ma?
We know more about the location and condition of Putin’s prisoner Alexei Navalny than we do about Jack Ma. Ma’s business empire has been under assault by the Chinese authorities, and is being “rectified” (broken up). But what about Jack Ma himself?

Pulling the plug on the IPO was reported to have been on the direct instructions of President Xi Jinping.

The YouTube of The Speech is in the Sources section at the end of this article.

Since then Beijing has increased its scrutiny and undertaken a broad crackdown of its technology sector. The casualties include some of China’s leading tech companies, such as Tencent (the internet conglomerate), Meituan (food delivery), Pinduoduo (e-commerce), Didi (ride-hailing app), Full Truck Alliance (truck-hailing app), Kanzhun (recruitment), online private tutoring companies like New Oriental Education and TAL Education, and a crackdown on cryptocurrencies.

Alibaba, the world's largest e-commerce firm were hit with a record US$2.8 billion fine in April for anticompetitive behavior in the new wave of anti-trust investigations. (Alibaba was founded by Jack Ma and is often described as China's version of Amazon, only bigger...see the end of this article for an interesting comparison of Amazon versus Alibaba.)

Didi IPO

Scrutiny of China Tech intensified when Didi Chuxing, the Chinese version of Uber, went ahead with a US$4.4 billion IPO in June. The ride-hailing service made its debut on the New York Stock Exchange on 30th June at a valuation of $68 billion on 2020 revenues of $21.6 billion.

Although there are several other ride-hailing apps in China, DiDi is the undisputed market leader and is estimated to have over 90% market share.

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