03.15.21 - China cracked down on big tech within its borders recently by fining twelve companies, including Tencent Holdings and Baidu, due to the fact that they neglected to properly report investment deals.
Because these companies failed to report past deals, China’s State Administration for Market Regulation fined each of them 500,000 yuan. While this is a small step to increase restrictions on tech giants (considering 500,000 yuan equates to roughly $77,000), China is attempting to tighten restrictions on companies with offshore accounts that have been taking advantage of tax havens, as well as obtaining investments from foreign entities.
China has taken an interest in these large tech companies due to a set of “anti-monopoly” laws that Chinese regulators have previously been lenient on enforcing. China’s antitrust law states that if a company were to take part in deals that have restricted competition or if they eliminated competition, regulators would have the authority to disband the company.
Despite the fine imposed on these companies being relatively small, the message was received when Tencent stated that the company would, “continue to adapt to changes in the regulatory environment and will seek to ensure full compliance.”
Source: Wall Street Journal