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Regulations catching up with China tech sector that's grown "too fast, too big"

Martin Lau
Martin Lau7/29/2021 4:22 PM GMT+08  • 5 min read
Regulations catching up with China tech sector that's grown "too fast, too big"
Tightening regulations will be good for the industry and consumers alike in the long run
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Global tech giants Facebook, Amazon, Apple, Microsoft and Alphabet’s Google (the “FAAMG” group) have all faced increasing regulatory scrutiny on varying issues such as alleged platform dominance, anti-competitive behaviour, data privacy and the spread of misinformation.

In our view, the Chinese technology platforms have grown too large, too fast; and now the regulatory environment is starting to catch up. Fierce competition and a “winner takes all” mind-set means that participants have had to dole out huge sums to subsidise sales (often to below cost) in order to cross-sell services to their broad customer bases and continue to secure high growth rates. This cash burn is simply unsustainable in the long run.

Despite our general misgivings about governments, we believe that tightening regulations will be good for the industry and consumers alike in the long run. Clearly, unfettered power in the hands of a few tech company moguls cannot be good for society. If we look at the main goals of the antitrust guidelines issued by the State Administration of Market Regulation (SAMR), they are designed to promote fair competition and a healthy, innovative market.

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