Last December, antitrust investigations into tech giants Alibaba and Tencent began, mainly over concerns of anti-competitive behaviour and excessive data collection for personalised advertisements. These companies have been able to operate over the past years with little to no regulation, so these investigations are some of the first for tech giants in China, in which it is likely that there will be more to come throughout 2021. Prior to the announcement of investigations into Alibaba and Tencent, last November regulators released the first draft of new antitrust rules and guidelines for companies within the internet sector in China.
The anti-monopoly law has also been reviewed by lawmakers after 12 years to go ahead with the Chinese Government’s 2021 plans for a crackdown on big tech monopolies. A practice used by companies like Alibaba called “pick-a-side”, where merchants are forced to sell on one platform resulted in a need to look deeper into this much monopolistic behaviour.
Alibaba has already been sued by other e-commerce giants such as JD.com, Pinduoduo and many others who are against Alibaba’s practice of forcing merchants to enter an exclusive contract to stunt competition. However, all these companies are now facing potential damages to their reputation and services, with the close eye that the government will be keeping on them, in hand with new regulations that could hinder growth for many e-commerce giants in China.
The US government is also standing up to tech giants like Google, Amazon, and Facebook- who have been under fire for anti-competitive behaviour for years. Towards the end of 2020, Google was facing accusations from the US government, as well as from the European Commission over anti-competitive practices. Facebook has also been hit by major lawsuits that are still ongoing but hold the potential to do some real damage to the company. Surprisingly, these issues have had little effect on company stock prices, as they have all been facing accusations and lawsuits for years yet manage to remain unscathed.
Most of the practices that US tech giants are coming under fire for are mainly those that are anticompetitive. Google is being accused of maintaining search monopoly with alleged anti-competitive contracts with web browsers and companies like Apple. The lawsuits filed against Facebook express concerns over the company’s social media domination and the ease in which they eliminate and bully competition. There are also accusations made by the US government over these companies collaborating to maintain their position as monopolies.
There has been a recent global wave of cracking down on monopolies and reinforcing antitrust regulations with the rise of monopolistic e-commerce giants like Alibaba and Amazon. However, the difference between the antitrust investigations currently ongoing in China and the US is that for China, this is very much barely touched territory. Tech giants such as Alibaba and Tencent have had little to no regulation in order to promote their rapid growth over the years.
On the other hand, tech giants in the US such as Google, Amazon and Facebook have been receiving multiple lawsuits over the years, and there has been an effort to reinforce antitrust guidelines. However, it seems as if these actions alone will have yet to make a difference within their practices. Especially since there has been no real impact on stock prices compared to the hit that Alibaba and Tencent took after the antitrust investigations were announced at the end of last year.
For both countries, it seems as though one of the main concerns is the excessive data collection for personalised ads, as it is apparent that to personalise advertisements as accurately as they do, copious amounts of personal data are required for this. So, when companies like Alibaba or Facebook who rely on the accuracy of these services are not able to deliver, it could pose a serious threat for their future growth, yet this will likely open up new opportunities for smaller businesses to succeed within the industry and promote stricter antitrust regulations.
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