It Now Looks As Though Big Tech, Which Until Now Has Faced Very Little Regulation And Has Spent Huge Sums Of Money On Lobbying Government.
Attitudes globally toward big tech seem to be shifting. Until now, the European Union had pretty much set the regulation benchmark, while the United States and China have been much more tolerant of the excessive growth of the likes of Google, Facebook and Amazon, or their Chinese equivalents, Alibaba, Baidu or Tencent, among others. In the United States, since Joe Biden came to power, it seems that both Democrats and Republicans agree that these companies have become too powerful and need to be regulated (and in fact, the new administration has been placing well-known critics of big tech in key positions).
Now, China seems to be taking the same route, and is moving to regulate its tech giants. First came the abandoned IPO of Ant Financial, Alibaba’s financial company, destined to be the largest in history until it was suddenly forced to halt the process, restructure and get rid of its founder, the hitherto untouchable Jack Ma. The pressure then intensified after Alibaba was fined a record $2.8 billion for abusing its dominant position by preventing merchants from selling their products on other platforms. Food delivery company Meituan has been fined for similar reasons, while the pressure continues with the government telling Tencent, ByteDance, Baidu, JD,com, Didi and seven other fintech companies to “rectify problems”. Finally, some 30 apps have been warned about intrusive collection of personal data from its users.
Why is Beijing suddenly so zealous in regulating these companies after many years of laissez faire? The idea would seem to be to prepare them for markets where the regulatory climate is also intensifying. The Chinese Communist Partyt has prepared legislative packages aimed at controlling issues such as antitrust law or data protection in the hope that the rest of the world will look more favorably on Chinese companies. This may not be so easy, given these companies’ relations with their government, which maintains the right to demand any kind of data from them, one of the reasons why Huawei and ByteDance have encountered problems in the past.
Another reason the tech giants face calls to be more strictly regulated is the need for an innovative tech environment: when any small company with a good idea that gains traction in the market knows that it will become the target of an acquisition and that if it resists it, Facebook or whoever will simply use its unlimited resources to copy its idea severely reduces the chances of interesting new players with ambitious plans emerging. That said, a word of caution: the EU, arguably the most regulated environment in the world, has never stood out as being particularly innovative or able to take its technology companies, with few exceptions, to the top of the competitive ladder.
Nevertheless, It Now Looks As Though Big Tech, Which Until Now Has Faced Very Little Regulation And Has Spent Huge Sums Of Money On Lobbying Government, is about to see the tables turn, given its abysmal record on self-regulation. The days of unlimited expansion, unrestricted acquisitions and copying rivals’ models, along with privacy violations, could be about to end. Whether this happens in Europe, the United States or China, is surely very good news for everyone.
This news was originally published at Forbes.