China is offering a masterclass on how to humiliate big tech, right?
ANTITRUST USED to be as American as apple pie. The Boston Tea Party was, in part, a protest against the monopoly of the British East India Company. The word itself comes from the trusts, such as Standard Oil, which ruled the American economy in the 19th century. During periods of the 20th century, it became America’s charter not only for free enterprise, but for political freedom. Compare that with China, a communist dictatorship whose anti-monopoly law, introduced in 2008, has most often been used only to bludgeon foreign companies. In such hands, it’s easy to dismiss breach of trust like Orwellian gibberish.
And yet, all of a sudden, antitrust in China came to life like police home affairs thanks to the British police show “Line of Duty”: as a source of endless fear and fascination, led by agencies with impenetrable acronyms and concern for Stasi-type Dawn Raids. In no time, he turned the country’s former tech giants into mincing poodles.
The assault marks the rise of a new type of regulatory authoritarianism. America and China have similar qualms about the influence of their big tech companies. But since President Xi Jinping gave the green light to his disloyal warriors last fall, China has outstripped America in the speed, scope and severity of its antitrust efforts, giving the word new impetus. techlash “. For those frustrated with the power of tech giants in America, China offers a masterclass on how to shrink them down. If only, that is, America could emulate him.
Start with speed, the Communist Party’s greatest advantage over hesitant American Democrats. When oversized tech barons treat politicians like idiots, don’t invite them to mind-numbing congressional hearings. Force them to lay low for a while, like China did with Jack Ma, co-founder of Alibaba, China’s largest e-commerce company, who also founded its fintech partner Ant Group. In no time, the billionaire class got the message. It took just over six months after Mr. Ma’s humiliation for the founders of two other Chinese tech giants, Pinduoduo and ByteDance, to announce that they were stepping down from public life. It also took less than four months of an antitrust investigation for Alibaba to be fined $ 2.8 billion in April. On the other hand, a trial date for Google, continued last October by the US Department of Justice (reoJ) and 11 states for alleged monopoly abuse by its research activity, will not intervene before 2023. Yawning.
Then the scope. Don’t let pesky courts get in your way, like they do in America. Throw the book to the troublemakers using the tools that a one-party system gives you. As Angela Zhang puts it in “Chinese Antitrust Exceptionalism,” a book written before the latest technological crackdown, China’s regulation of monopolies begins with agencies fighting for power and influence. Their recent rampage has been supercharged by amended laws in a range of subjects. They have fined companies for crimes ranging from online price discrimination to merchant abuse and irregularities in technology merger deals. The recent crackdown on transport giant Didi days after its New York IPO focuses on concerns encompassing data security and espionage.
Don’t expect Didi, or the so-called monopolists, to seek protection from the courts. In China, trustbusters are hardly ever subject to judicial review. Chinese agencies, writes Ms. Zhang, deal with “investigations, prosecutions and judgments.” In other words, they are at the same time police officers, judges and jurors. In America, the reverse is true. In June, a U.S. judge dismissed a six-month lawsuit brought by the Federal Trade Commission (FTC), the US antitrust regulator, against Facebook, arguing that the government has never proven that the social network has monopoly power. Second round to the totalitarians.
Third, gravity. These aren’t the fines that tech titans fear most. It’s seeing their business models torn apart, like Ant’s was, as well as the damage to reputation; bureaucrats can use state media and populist outrage to wreak havoc on the sales and stock price of an infidel. This year, amid the crackdown, the value of China’s five largest internet companies fell by $ 153 billion. In America, despite lawsuits, investigations and hearings, Alphabet, Amazon, Apple, Facebook and Microsoft have climbed $ 1.5 billion in value. As Chinese companies surrender, Americans fight back, publicly defying opponents, like Lina Khan, who heads the FTC. Jonathan Kanter, the Google choice of President Joe Biden to lead the reoJthe antitrust division of, can expect similar treatment.
Be careful what you wish
Presumably all of this would arouse envy among the trustbusters in Washington, CC– weren’t they an even dirtier word than “tech” these days. Not only has China taken over the antitrust mantle of its superpower rival. He did it strategically. It strengthens Mr. Xi’s control over potential rivals for popular adulation: tech billionaires. This gives the central government more control over an ocean of digital data. And that encourages autonomy; the goal is to have a flourishing technological scene producing global innovations under the control of the Communist Party.
But autarky comes with its own risks. Already, Chinese tech darlings are canceling plans to issue shares in America, derailing a sauce train that has allowed Chinese companies listed there to reach a market value of nearly $ 2 billion. Techlash also risks stifling the animal spirits that make China a hotbed of innovation. Ironically, just as China applies water torture to its tech giants, it and America are witnessing a flurry of digital competition, as incumbents swarm their territory and are hired by new challengers. Now is the time for encouragement, not repression. Instead of demolishing tech giants, US trustbusters should strengthen what has always served the country best: free markets, the rule of law and due process. This is the only lesson America can teach China. This is the most important lesson of all. ■
This article appeared in the Business section of the print edition under the title “War war v jaw jaw”