Chinese tech giants seek to anticipate regulators with trade changes

In this photo, the logo of Chinese tech company Tencent is seen on an Android mobile device with the flag of the People’s Republic of China in the background.

Budrul Chukrut | SOPA Pictures | LightRocket | Getty Images

GUANGZHOU, China – Chinese tech giants are looking to change their business models and working practices to anticipate action by regulators as authorities crack down on the once free-wheeling industry.

Over the past year, regulators have introduced new rules in areas ranging from anti-monopoly for internet companies to data security, targeting large tech companies.

And the punishment came quickly. Ant Group’s record initial public offering was withdrawn by regulators in November, while Alibaba was fined $ 2.8 billion following an anti-monopoly investigation.

Transit giant Didi, meanwhile, came under a cybersecurity review days after its massive IPO in the United States. And China’s main cyberspace regulator this month ordered app stores to halt downloading of Didi.

As regulators blow tech firms’ necks, companies have sought to take action to appease authorities.

Tencent this month sought to strengthen its patrol of miners playing games. Under Chinese regulations, minors are prohibited from playing online games between 10 p.m. and 8 a.m. Tencent, one of the world’s largest gaming companies, said there were cases of children using adult accounts to play games.

To counter this, the company will require the player to perform a facial recognition scan on their phone to verify if they are an adult.

In recent years, the Chinese government has raised concerns about video game addiction and how it could affect children’s health. In 2018, regulators froze video game approvals in China due to issues of violence in some titles as well as potential addiction and growing cases of myopia. Games in China must be approved by censors to be published and monetized.

Tencent appears to be ahead of any further regulatory action with its latest measures.

Anti-monopoly focus

In February, regulators released anti-monopoly rules for internet platforms. Beijing is concerned about the size and power of Chinese tech companies, which have become some of the largest in the world, largely freed from regulation.

Alibaba’s investigation, which ended in April and resulted in a $ 2.8 billion fine, was a practice that requires traders to choose one of two platforms on which to sell their products .

Both Alibaba and Tencent have effectively built walls around their products. For example, users cannot use Tencent’s WeChat Pay service on Alibaba’s Taobao e-commerce site.

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But it looks like Tencent and Alibaba may be looking to get ahead of possible antitrust measures.

The Wall Street Journal reported on Wednesday that Alibaba and Tencent are looking to ease some of the lockdowns on their respective products. This could include the optional authorization of WeChat Pay on Alibaba purchasing services.

“Such self-regulatory measures would be ahead of the regulatory curve, as Tencent often is – and Alibaba hasn’t,” Neil Campling, head of technology research, said Wednesday. media and telecommunications at Mirabaud Securities Limited, in a note. .

996 work culture

Tech companies are also trying to change the long-standing practice of grueling working hours known as 996.

These are employees working 9 a.m. to 9 p.m., six days a week. Alibaba founder Jack Ma once called Culture 996 a “huge blessing,” but it has come under heavy criticism.

On Tuesday, Ling Zhenguo, a member of China’s top political advisory body known as the Chinese People’s Political Consultative Conference, wrote an op-ed in the entity’s official gazette, apparently criticizing 996 culture.

The internet economy should put “people first” shouldn’t tie “every profit made with every minute of hard work by employees,” according to a CNBC translation of the article in Mandarin.

“We must be clearly aware that this contrasts with the market economy with Chinese characteristics of seeing people’s legs as wheels and hands as robots,” Ling added, effectively saying that humans should be treated like humans. .

Ling’s article highlights how the 996 work culture could be Beijing’s next target.

But tech companies have already started to change their practices.

Last week, ByteDance, owner of TikTok, said that starting August 1, he was ending the “big week, little week” practice. This is where workers worked every other Sunday and got paid. The application of Kuaishou short videos also rescinded the policy last month, according to local media.

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