China’s tech giants will face tighter regulation

Significance

The primary targets (for now) are the largest firms, Alibaba and Tencent, and their subsidiaries. Alibaba alone accounts for one-fifth of all consumer goods sold in China.

Impacts

• New measures will protect consumers and other traders and put greater scrutiny on M&A.
• An ownership structure (the ‘VIE’ structure) that tech firms use to circumvent M&A requirements will attract greater regulatory attention.
• A revised Anti-Monopoly Law enabling huge fines for violations by tech giants is likely to pass mid-year.