Chinese regulatory crackdown is about control, not data privacy

There was a notable shift in China’s approach to regulating its tech giants last year when the government began investigating online shopping giant Alibaba, which filed for an IPO in 2014 and is publicly traded on the New York Stock Exchange. In April, China hit the company with a $2.8 billion fine after antitrust regulators concluded the company was behaving like a monopoly Alibaba was created Ma, who stepped down from Alibaba’s board in 2020, disappeared for months, keeping silent as the Chinese government went after the companies, Li said.

“Just based on what happened to Alibaba last fall, you can see just how strong a hand the government has over these tech companies,” Li said. “I think that puts a real damper on the competitive nature of the business environment.”

On Monday, China’s regulatory arm, the Ministry of Industry and Information Technology, initiated a six-month rectification program, ordering Chinese tech giants to stop anticompetitive practices and the mishandling of consumer data.

While some of the concerns from the Chinese government sound familiar — the U.S. is also focused on data privacy and how companies like Amazon and Apple treat third-party vendors — China’s increasing crackdown on its own tech companies is less about consumer data protection and fair competition, Li said, and more about China’s desire to protect its own national interests By citing national security concerns, Li said he believes China is belatedly retaliating against actions taken Instead of just banning Western apps from operating in China, China is taking a new approach “Many, if not most, apps are banned in the Chinese app stores,” Li said. “But the different tactic now is The regulatory crackdown serves as a warning to key officials within the country, as well as business owners, of the control the Chinese government exercises, and it highlights China’s focus on competition with the U.S., which has become increasingly tense.

“The broader context is that technology, big data, cyberespionage, they all play a larger role in geopolitics than ever before, so nothing can be taken out of the context of U.S.-China animosity in the current environment,” Li said. “With the beginning of [President Joe Biden’s] administration, it was kind of a letdown to some Chinese hopes that Biden would be a little easier on China. I think that’s the important factor there.”

Indeed, in a statement released by the White House earlier this month, the U.S. government blamed Chinese state-sponsored threat actors for the extensive Microsoft Exchange Server cyberattacks that occurred earlier this year. The U.K. and NATO also accused China of hacking Microsoft.