Taming the 'Internet Giants' in China: "Strengthening Antitrust Regulations"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] The Chinese government has decided to regulate companies from providing subsidies through discount coupons or price cuts to consumers as part of its antitrust regulations.

According to the Chinese government website on the 27th, the State Council announced at a business meeting chaired by Premier Li Keqiang the previous day that it would "strengthen the enforcement of antitrust-related laws."

Although the State Council did not specify particular sectors, the subsidy restriction regulations are expected to have a direct impact especially on internet companies.

Specifically, the government plans to identify companies with dominant market positions that maliciously provide subsidies to consumers or engage in dumping sales at low prices to increase their market share.

In the Chinese internet industry, it has become common to secure customers by offering large amounts of discount coupons to gain market share.

In particular, when new entrants enter industries traditionally led by existing companies, fierce subsidy wars break out.

A representative example is when Meituan, centered on food delivery services, entered the ride-hailing market led by Didi Chuxing in 2018, and both companies competitively distributed subsidies to customers and drivers.

Since Alibaba founder Jack Ma publicly criticized government regulations as "outdated" at an event in October last year, Chinese authorities have been taming "internet giant" companies by emphasizing antitrust, financial stability, and personal information protection.

Alibaba Group has since faced various pressures, including a 3 trillion won antitrust fine.

This content was produced with the assistance of AI translation services.