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China Tech Crackdown Seen ‘Just Getting Started’ on Data

China’s tech crackdown will continue to target online companies over issues from antitrust to data privacy, say analysts.

China tech crackdown
China has in recent years strengthened oversight over data collected in the country.


China is just getting started with its crackdown on its tech giants – and is going to be pushing even harder to regulate the way companies use data.

That’s according to analysts who say they expect China’s online firms to come under even more pressure when Beijing implements a new data privacy law on November 1.

“The tech crackdown is most certainly not over,” Kendra Schaefer, a researcher from Trivium China, warned. “Policymakers have loudly signalled increased anti-monopoly regulation over the past several months, and the push to regulate the way companies use data is just getting started.”


Chinese President Xi Jinping reiterated last week that China would break up the platforms’ monopoly and their “disorderly capital expansion,” at a Politburo conference to discuss the promotion of digital economy. 

Beijing has imposed a slew of policies to rein in its booming internet sector after shooting down Jack Ma’s Ant Group’s $34 billion initial public offering last November. Fintech, food delivery, gaming and private tutoring have all been under regulatory pressure since. 

China’s Personal Information Protection Law, modelled on the European Union’s General Data Protection Regulation, is set to take effect on November 1. 

It is focused on apps using personal information to target consumers or offering them discriminative prices on products and services, and preventing the transfer of personal information abroad.

Chelsey Tam and Ivan Su, equity analysts from Morningstar, expect the new law to affect companies that rely on feeds-based, algorithm-based advertising, such as Weibo, which earns 87% of its revenue from advertising.

Baidu gets 61% of its revenue from advertising but most of it is search-based and won’t be hugely affected, they said in a note. Tencent receives 17% of its revenue from advertising.

Regulatory Support

Sectors that currently enjoy considerable regulatory support include semiconductors, smart cars, green technologies such as those used in data centres, cybersecurity and tech platforms that serve the public good, such as health tech, according to Schaefer.

“That does not mean these sectors will not be subject to regulation at any point, but that they are currently high-priority sectors for the government,” she added.

Recent regulatory crackdowns have focused on antitrust, social equity, data privacy and minor protection issues, said Lorraine Tan, Morningstar’s Director of Asia Equity Research, at a media briefing last week.

Tan believes market sentiment will improve going forward as “the majority of the policies are already announced.”

Still, concerns over further tightening of regulations may linger until the first quarter of next year, and the government’s calls for big tech to play a larger role in Xi’s “common prosperity” push could put pressure on the companies’ profit levels, she noted.


Social Responsibility Programmes

Alibaba last month said it would invest 100 billion yuan ($15.5 billion) to support the “common prosperity” drive, while Tencent has announced a plan to double the amount of money allocated for social responsibility programmes to about $15 billion.

While a panic over China’s tech crackdowns has pushed the Nasdaq Golden Dragon China Index down by almost 30% this year, Morningstar analysts said the market “has overreacted” and believed these can be the “best times to invest.”

Charlie Munger, Warren Buffett’s longtime partner, seems to agree. 

A filing with the US Securities and Exchange Commission showed that the Daily Journal, a newspaper publisher and software developer chaired by Munger, bought 165,320 shares in Alibaba in Q1 and increased its holding to 302,060 shares in Q3, which was an 83% increase. Alibaba shares now account for about 20% of Daily Journal’s portfolio.

Alibaba’s stocks are now trading in the $170s, representing a price-to-earning ratio that is about one-third of that of Amazon.


  • By Iris Hong


Read more:

The Hit List: How China’s Crackdowns Have Cost Its Firms Billions

Microsoft To Shut Down LinkedIn In China As Crackdowns Bite

Crackdown-Hit Alibaba to Divest 5% Stake in Chinese Broadcaster


Iris Hong

Iris Hong is a senior reporter for the China desk, and has special interests in fintech, e-commerce, AI, and electric vehicles. She began her career in 2006 and worked for Interfax News Agency and for PayPal before joining Asia Financial in July 2020. You can reach out to Iris on Twitter at @Iris23360981


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