Beautiful Virgin Islands

Wednesday, Sep 03, 2025

Is Alibaba's fate a warning to China’s tech giants?

Is Alibaba's fate a warning to China’s tech giants?

It's been a tough week for Chinese tech firms.

Over the weekend, Chinese billionaire Jack Ma's e-commerce giant Alibaba was fined $2.8bn (£2bn) by Chinese regulators, who said it had abused its market position for years.

Then on Monday, Chinese digital payments firm Ant Group - an affiliate of Alibaba - announced a drastic restructuring plan with regulators forcing it to act more like a bank than a tech firm.

And on Tuesday, 34 companies, the who's who of China's tech world, were summoned by officials and warned: let Alibaba be a lesson to you.

They've been given one month to "self-reflect" and comply with China's new rules for platform companies.

Alibaba is the grandfather of China's tech industry. It dominates the marketplace there with over 800 million users in China alone.

That is why it was a wake-up call for others in the tech sector when the firm was fined and officially reprimanded.

The investigation into Alibaba determined that it had abused its market position for years by restricting merchants from doing business or running promotions on rival platforms. The fine amounts to about 4% of the company's 2019 domestic revenue.

Industry players tell me "everyone is tense". The big firms are worried they're next.

Companies like Tencent, JD.com, Meituan, Bytedance and Pinduoduo are all looking at Alibaba's experience, and trying to avoid crossing any red lines set by Beijing.

No-one can be more powerful than the Party


On the face of it, Alibaba's fine is about increased regulation in the sprawling Chinese tech sector, and for many it is a good sign that the market has matured.

"If you read the laws, Chinese regulators are trying to be more forward looking and think ahead, in an attempt to regulate an industry that is moving so fast," says Rui Ma, a China tech analyst and co-host of the podcast Tech Buzz China.

"They are including the use of algorithms, not just market share. They are trying to understand the platform economy and trying to be in line with what more developed economies are doing."

But the moves are also seen as political.

They are an indication that under President Xi Jinping, nothing can be bigger or more powerful in the lives of ordinary Chinese people than the Communist Party.

These companies have created an alternative virtual world for Chinese people, and have a huge hold over their lives. You can't get through a day without accessing one of these apps in China.

But that same influence over the lives of Chinese people puts them in direct competition with the Chinese Communist Party.

The regulators' moves show that under President Xi Jinping, nothing can be more powerful in the lives of ordinary Chinese than the Party

Sources in China's financial circles tell me they suspect it "irked a lot of the top leadership in Beijing" when the godfather of Chinese tech Jack Ma made a speech dismissing the traditional banking sector last year.

The speech led to state media criticising Mr Ma's businesses Alibaba and Ant Group. Then Mr Ma and his team were summoned by regulators and the much-anticipated share market launch of Ant was suspended.

Observers tell me what Mr Ma said at that symposium has cost him dearly.

It is clear both Ant and Alibaba are keen to draw a line under these events.

In an investor call this week, Alibaba's executive vice-chairman Joe Tsai said: "From a regulatory standpoint….in our case we have experienced the scrutiny and we're happy to get the matter behind us."

He added: "I think on a going forward basis, globally the trend is that regulators will be more keen to look at some of the areas that you could have unfair competition."

China tech's 'Wild West' is changing


Chinese tech firms were born and grew up in an environment with little or no regulation.

The sector operated a bit like the Wild West, with a "build it and they will come" philosophy.

And for a long time the government actively encouraged that.

Alibaba vice-chairman Joe Tsai: "We have experienced the scrutiny and we're happy to get the matter behind us"

"China has had national schemes to promote entrepreneurship and innovation," Angela Zhang, associate professor at the University of Hong Kong tells me.

She is an expert on Chinese law and is the author of a recent book called Chinese Antitrust Exceptionalism.

"In the past regulators were a bit more lax in their approach. They used alternative regulatory tools which were more lenient to the tech firms."

But that regulatory landscape is changing as China tries to rein in these firms.

Killing the chicken to scare the monkeys


Prof Zhang says that while Beijing is keen to rein in the sector - it won't want to kill off the economy's golden goose.

"In Chinese there is a phrase, killing the chicken to scare the monkeys," she says. "Alibaba will be used as an example, as a lesson for other tech firms to learn from.

"If you put yourself in the shoes of the Chinese leadership, they definitely want economic prosperity. Growth is a major priority of the government. Alibaba's experience will ensure the others fall in line."

Rui Ma agrees, and says the rules will help to foster more innovation for smaller companies in China who up till now have been squeezed out by the big players.

"Local venture capitalists I've spoken to are generally supportive of these regulations," she says. "They think there's more opportunities to find younger, newer companies that never stood a chance before."

How a little Ant became a financial giant


Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Pickles are the latest craze among Generation Z in the United States.
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
WhatsApp is rolling out a feature that looks a lot like Telegram.
Investigations Reveal Rise in ‘Sex-for-Rent’ Listings Across Canada Exploiting Vulnerable Tenants
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
×