China’s antitrust regulators are taking more strident action in reviewing mergers and other deals made by players in that nation’s booming internet sector.
On Monday (Dec. 14), China’s State Administration for Market Regulation announced that it was reviewing a merger between DouYu International Holdings and Huya that would create a game-streaming site similar to Amazon’s Twitch service, according to Bloomberg.
The agency also fined Alibaba for not seeking approval in 2017 before increasing its stake in department store operator Intime Retail Group, also known as Yintai Commercial. Similarly, Tencent’s China Reading Group was fined for its 2018 acquisition of Xinli Media, and Fengchao Network for its 2020 takeover of China Post Express, according to a statement by Chinese authorities.
Alibaba acquired Intime in a deal valued at around $2.6 billion as part of an effort to combine online retailing with brick-and-mortar stores. China Literature paid approximately 15.5 billion yuan to increase its filmed media content, according to Bloomberg.
In November, Chinese authorities announced a regulatory framework aimed at curbing anti-competitive behavior in the internet sector, including colluding on sharing certain consumer data, creating alliances that box out smaller rivals and subsidizing services to undercut competitors, per Bloomberg. The framework would also encompass companies in the payment services sector.
Last month, Tencent said it would comply with new laws intended to curb antitrust activities and tighten FinTech acceleration.
Bloomberg said the moves have fanned concerns of a broader crackdown on China’s biggest companies. It noted that shares of Meituan, China’s third-largest internet company, sank after the People’s Daily ran an editorial criticizing the sector for focusing more on traffic than innovation.
China Literature said it has been actively working with Chinese regulators on compliance issues. Alibaba did not immediately comment on the matter.
Earlier this month, China’s top banking and insurance watchdog was reported to be eyeing a crackdown on Big Tech’s perceived monopoly of financial data and further curb abuses of power, CNBC reported on Tuesday (Dec. 8).
“Facing the rapid growth of FinTech, we will adopt a positive and prudent approach. We will encourage innovation while enhancing risk control, so as to address new problems and challenges,” Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), said during a speech at the Singapore FinTech Festival that ran through Dec. 11.
Aside from cybersecurity, the other area of concern is curbing the power of big FinTech giants in China, Guo said, but he did not name any companies.
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