The Ant headquarters in Hangzhou. The Chinese Communist party recently halted the fintech company’s $37bn initial public offering © Qilai Shen/Bloomberg

The writer is international policy director at Stanford University’s Cyber Policy Center

The desire to curb Big Tech has gone global. One reason for this is that giants such as Amazon, Apple and Alibaba have become so large that they are setting norms and standards for hundreds of millions of people around the world.

Technology is not a sector any more but rather a layer that impacts on all other sectors, ranging from media to agriculture, from transport to financial services. Powerful, data-driven companies increasingly challenge the position of governments themselves.

European and American regulators have shown a growing willingness to curtail national champions. Now this seems to extend to China too, after Alibaba’s founder Jack Ma’s long-anticipated $37bn initial public offering of online micropayment giant Ant Group was last month halted by regulators. Mr Ma saw the company as a technology vendor, but regulators scrutinised its impact on banking and finance.

China has produced some of the world’s largest technology companies, such as Tencent, ByteDance and Alibaba. These companies are often perceived to be answerable, ultimately, only to the Communist party.

That is certainly the view of much of the US, and increasingly much of Europe, of 5G giants such as ZTE and Huawei. These groups are seen less as private companies than as the instruments of a foreign adversary.

Why did Beijing suddenly get so heavy-handed with one of its homegrown titans? The official reason is that it was part of an initiative to require internet borrowing platforms to provide more of their own funding for loans, especially as the size of Ant’s Rmb1.7tn ($259bn) loan book is a potential systemic risk.

But it may just as well have been because the Communist party considered competition from a successful fintech company as encroaching on its own role. Or it may have been due to personal, economic or bureaucratic concerns. Or it could have been simply a show of force.

Restrictions on Ant that Beijing invoked at the eleventh hour are somewhat reminiscent of the threat by President Donald Trump to force a sale of the US business of the viral Chinese app TikTok: a sudden and far-reaching restriction was placed on a single company from the very top. Both bear all the hallmarks of a political intervention, even if formal arguments may point to national security or concerns over liquidity.

Whatever the most important reason, the signal from the Ant case was clear: it marked China’s entrée into the world of Big Tech regulation and showed that Beijing is willing to halt tech’s expansion domestically too. (A range of US companies continue to be banned in China.)

China is a one-party, authoritarian state. This is important because it will inform the values that drive Chinese tech rules. While Beijing, like the US and the EU, may be worried about Big Tech’s significant power, its responses are different. Where the US puts its trust in the market and uses market rules to mitigate harms, the EU frequently references fundamental rights protection as its most important driver. The Chinese system relies on a forceful state.

Much of the world continues to worry that the Chinese state can weaponise its technology sector to serve its own (geo) political interests. Recently introduced antitrust rules or the prevention of Ant Group’s IPO are unlikely to change that.

Several proposals for a global democratic alliance to govern technology regulation are explicit in their desire to counter China as a global tech power. References to values, such as in the ambitions of democratic nations to band together, are becoming more assertive. In addition to the geopolitical race for dominance in artificial intelligence, another layer of global competition has now been added: between different models of technology governance.

Regulations will have widespread effects on supply chains and consumer access to global platforms, as well as on data and privacy rules. Models for technology governance may be driven by security or social stability concerns, human rights (as in the EU) or economic factors such as antitrust. Whatever the case, decisions taken in Beijing, Brussels or Washington will ripple across the world.

Chinese state officials can in future use their recent regulatory decisions to underline the state’s strength and emphasise there is a lot of light between corporate and state interests. Tech companies in China — as in Europe and the US — have been put on watch.

Letter in response to this article:

West risks emulating Beijing’s state capitalist Big Tech model / From Yi-Chen Lu, Researcher, Rotterdam School of Management Rotterdam, The Netherlands

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