China accelerates plans to put a leash on its internet giants

It all started when China's poster boy Jack Ma, founder of Alibaba and one of the richest men in China, took a shot at the Chinese financial regulator at a global conference. Ma described some risks and ill-practices of the Chinese financial system which the government didn't take lightly.

Since then, the e-commerce giant is being shot one curveball after another. ANT Group, the parent company of Ma's most prized ventures, was supposed to go public this month. However now the process of getting listed in Shanghai and Hong Kong STOCK MARKET, according to many industry insiders, has been halted by the explicit directions of the Chinese premier.

Moreover, the Chinese government is fast-tracking a fresh legislation to curb the influence of internet companies following the Jack Ma fiasco.

So, what's in this regulation? In the guise of an anti-trust law, that your government has drawn inspiration from the west, the brand new regulation aims to root out 'monopolistic practices' of the big fishes available in the market. The State Administration for Market Regulation (SAMR), has recently published the first draft of the guidelines for everybody. The draft legislation indicates several frameworks to permit small scale companies to thrive available in the market. It can so by penalising or adding the need of regulatory approval for just about any move that might seem to be monopolistic in nature. These monopolistic practices are also vaguely outlined in the regulation i.e. forming of ventures or alliances; collecting, collating and sharing of consumer data; targeting consumers predicated on online behaviour, operating at below cost to curb out competition, specific guidelines when taking foreign investment, etc. Anyone violating these regulations will be facing dire consequences aswell. They would be forced to divest assets, tech infrastructure, IP rights; provide immediate access to the legal books and infrastructure and, if required, make necessary changes as per government guideline.

According to Morgan Stanely, this new regulation will probably hit Alibaba (e-commerce and payment), Tencent (videogames & social media) and Meituan (food delivery) the hardest. However, international investors weren't totally surprised by this move of the Chinese government. The Xi Jinping regime has been wanting to diminish the your hands on Chinese internet giants for some time now. Tencent's music publishing subsidiary was at the mercy of a lengthy investigation not while back on grounds of predatory market practices. Some even guesses, Ma's statement was a sensible way to mount pressure on the government as these regulations were impending anyways. Moreover, as the e-commerce scene is now fiercely competitive, some analysts of Wall Street are guessing the brand new regulations might now take long term toll on Alibaba in the end.

Whatever the case may be, but Alibaba has recently began to get its fair share of beating. Since the announcement of the regulations, stock prices of the web giants have began to take hit as well. Despite having a $56 Billion on sales in a single day during its 11.11-singles day shopping event, the shares of Alibaba took a nose-dive and lost around 10% of its total stock value.