Chinese tech giants look preempt regulators with business changes


In this photo illustration the Chinese technology firm Tencent logo seen on an Android mobile device with People’s Republic of China flag in the background.

Budrul Chukrut | SOPA Images | LightRocket | Getty Images

GUANGZHOU, China — Chinese technology giants are looking to make changes to their business models and working practices in order to preempt moves by regulators as authorities crackdown on the once free-wheeling sector.

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

And punishment has come swiftly. Ant Group’s record-breaking initial public offering was pulled by regulators in November, while Alibaba was slapped with a $2.8 billion fine as a result of an anti-monopoly probe.

Ride-hailing giant Didi meanwhile, became the subject of a cybersecurity review days after its massive U.S. IPO. And China’s top cyberspace regulator ordered app stores this month to suspend Didi from being downloaded.

With regulators breathing down tech companies’ necks, corporations have looked to make moves to appease authorities.

Tencent this month has looked to tighten up its patrol of minors playing games. According to Chinese regulations, minors are banned from playing online games between 10 p.m. and 8 a.m. Tencent, one of the biggest gaming companies in the world, said there are cases of kids using adult accounts to play games.

To counter that, the company will require the gamer to do a facial recognition scan on their phone to verify if they are an adult.

Over the past few years, China’s government has been concerned about video game addiction and how it could damage children’s health. In 2018, regulators froze video game approvals in China over concerns of violence in some titles as well as potential addiction and rising cases of myopia. Games in China need to be approved by censors in order to be released and monetized.

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

Anti-monopoly focus

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But it appears both Tencent and Alibaba could be looking to get ahead of potential further antitrust action.

The Wall Street Journal reported on Wednesday that Alibaba and Tencent are looking to loosen up some of these blocks on each others’ products. This could include allowing WeChat Pay as an option on Alibaba’s shopping services.

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

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