Inside China Tech: China’s central bank defines monopoly amid antitrust curb of fintech market
- The People’s Bank of China is moving ahead with a plan to curb market concentration in the world’s largest online payment services market
- Alibaba founder Jack Ma makes his first public appearance in nearly three months, while Tencent’s WeChat celebrates its 10th anniversary
Hi, this is Melissa Zhu from SCMP’s tech desk rounding up our top stories on China technology.
This week, we covered the central bank’s proposed definition of monopoly in China’s third-party online payments market, Alibaba Group Holding founder Jack Ma’s first public appearance in nearly three months and WeChat’s future outlook after a decade of influence.
Marking boundaries
Tracy Qu and Jane Zhang reported that under the draft rules, which are open to public feedback until February 19, any nonbank service provider with half of the market for online transactions, or two entities with a combined two-thirds share, could be subject to antitrust investigations.
Three providers with three-quarters of the market would also set off the antitrust alarm, but a nonbank service provider with less than 10 per cent market share that operates in a business with two or three dominant players will be excluded from antitrust probes, the central bank said.
China defines monopoly in antitrust curb of online payment services
(Ant Group is an affiliate of the South China Morning Post’s owner Alibaba Group Holding.)
The central bank did not define how it will measure the market share for nonbank third-party payments, and it used both “nonbank payment service market” and “nationwide electronic payments market” to refer to different markets in the draft regulation.
How the central bank defines the terms could have far-reaching consequences for the future of China’s US$29 trillion e-payment market and the country’s two largest mobile payment service providers, as Jane Zhang reported.
But when deciding whether an institution qualifies as a monopoly, “the boundary of a market should be defined by antitrust regulators and the courts”, said Angela Zhang, director of the Centre for Chinese Law at the University of Hong Kong. “In electronic payments, do you calculate market share by turnover or volume? It’s not that simple and easy.”
Alipay and WeChat Pay’s monopoly status remains unclear in new regulation
Jack Ma reappears
Separately, China’s market regulator launched an antitrust probe into Alibaba on December 24.
Ma’s reappearance in a video speech to 100 rural Chinese teachers on Wednesday morning came after weeks of speculation over his whereabouts.
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Jack Ma makes his first public appearance after nearly three months
According to a report by the Tianmu News, a news service run by the official Zhejiang Daily Group, Ma said in the video that he has been “learning and thinking” and that Chinese entrepreneurs must serve the country’s visions of “rural revitalisation and common prosperity”.
Although Ma retired from his official positions at Alibaba in 2019, he is still widely regarded as a key figurehead for his business empire and the face of China’s private business community.
“The key message that Jack Ma wants to express via this public appearance is that … Alibaba is still operating normally and the government has not specifically suppressed the company,” said Li Chengdong, chief executive of e-commerce consultancy Dolphin Think Tank. “This is also a message to the capital market that the Chinese government does not target privately owned companies.”
Jack Ma gives video speech to rural teachers after three months of silence
10 years of WeChat
Since it was launched in 2011, Tencent’s WeChat has profoundly changed how Chinese people interact with each other and the online world.
On the all purpose app, more than 1.09 billion people message each other, read the news, pay for purchases and more every day.
A study by data provider China Internet Watch found that WeChat users spend an average of 77 minutes a day on the app.
WeChat also accounted for one fifth, or 21.5 per cent, of total user time on the mobile internet as of September 2020, according to QuestMobile.
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WeChat: an app that runs apps including a fake news debunker
The success of the super app, which turns 10 this week, has helped make Tencent the largest company in Asia and propelled its market capitalisation to US$800 billion, the sixth biggest globally – up from US$47 billion a decade ago.
It faces criticism over content censorship, a ban on transactions in the US, fierce domestic competition with emerging rivals such as TikTok creator ByteDance and, increasingly, allegations of monopolistic business practices.
WeChat faces a more challenging future with tighter regulation, stiffer competition and changes in consumer habits, according to Mark Tanner, managing director of Shanghai-based consultancy China Skinny.
“As we look back into the past 10 years of WeChat development, it’s [been] a process of making choices and making iterations over time,” WeChat head Allen Zhang said on Tuesday.
How WeChat, Tencent’s 10 year old super app, changed China’s online world
That’s all for this week!
