(ATF) China’s new rulings on internet platforms has landed with the impact of an e-commerce Black Friday event. While internet platforms smashed online retail sales records from ‘Double 11’, the share prices of top online retailers in China plummeted. Tencent was especially mauled.
The newly released Anti-monopoly Guidelines on Platform Economy (Draft for Comment) has stirred market concerns about internet platforms. Among them, Tencent’s cumulative decline on stock markets reached 11.49% over two trading days, with its market value dropping by 588.5 billion yuan (US$89 billion), according to Wind data.
As ATF reported on November 12, Tencent released its third-quarter results and spoke on an investor conference call after the rules were announced. In response to the anti-trust guidelines, executives said that they would spend some time talking with regulators to understand what they hope to achieve, the China Securities Daily said.
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Industry insiders pointed out to the paper that the anti-monopoly guidelines may hit Tencent’s WeChat business, but its impact on games, advertising and finance is expected to be limited.
In 2018, Tencent became the first Asian company whose value topped half a trillion dollars. But some institutional researchers now believe there may be some impact on the business of Internet companies in the near future.
In a recent conference call, Tencent said it may cut back its gaming-related business, so the firm may consider the impact in this sector could be significant too.
Top Chinese officials sometimes refer to games as “electric heroin” and stomp on the industry, depending on which way the wind is blowing.
The Chinese Communist Party is also launching a series of apps to teach and record users’ knowledge of Chinese political thought – a kind of mobile version of Chairman Mao’s ‘Little Red Book’, but with more sophistication.
As reported yesterday, Tencent’s management stated in the conference call that the government is still very supportive of the internet technology industry and the firm is working with regulators to ensure compliance with requirements.
Tencent representatives said the guidelines call for a fair market environment, with the promotion of innovation, and a balance of interests for all relevant parties. Such laws and regulations are not new, nor are they unique to China. As companies grow larger and their contribution to the economy increases, more regulation reflects this situation, not only in China, but globally.
“The government still supports the internet technology industry, especially the innovation and development of the industry. Its purpose is to avoid improper behavior and ensure the long-term healthy development of the industry,” one said.
The new law comes after the country’s top leaders halted the massive initial public offering of Ant Group, which is a rival of Tencent.