China tells Alibaba to sell off media assets in tech crackdown
Beijing has ordered e-commerce company Alibaba to sell off media assets including Hong Kong’s South China Morning Post (SCMP) as the Chinese government looks to crack down on the growing public influence held by the country’s sprawling tech conglomerates.
Alibaba has become the lightning rod in the crackdown on big tech after founder Jack Ma, one of China’s most popular, outspoken and wealthiest entrepreneurs, delivered a blunt speech last year criticising national regulators that reportedly infuriated the president, Xi Jinping.
Following the comments, Chinese regulators blocked the $34bn stock market flotation of Alibaba online payments subsidiary Ant Group, which would have been the biggest share offering in history, and Ma disappeared from the public eye for three months. Last week, it emerged that regulators are reportedly preparing to hit Alibaba with a record fine in excess of $975m over anti-competitive practices.
China’s protectionist business regime, which shuts out foreign companies including Google and Netflix, has enabled a group of homegrown conglomerates to flourish as the country looks to build the next wave of global tech champions to challenge Silicon Valley.
Beijing has struggled to maintain control over their activities and wider influence with Alibaba’s media empire expanding to buy SCMP, Hong Kong’s premier English-language newspaper, in 2016 and holding stakes in social network Weibo, video streaming service Youku and Yicai Media Group, one of the country’s most influential news outlets.
“What is interesting here is that the Chinese Communist party has done a good job of cultivating huge tech giants, national champions,” said Jamie MacEwan, a senior media analyst at Enders Analysis. “But there has always been a split under the surface between those who want to encourage the great tech leap forward and a growing unease among those worried about these huge companies and the big public figures at the head of them, like Ma, outgrowing the patronage of the [Chinese communist] party.”
The Chinese government has not yet specified whether Alibaba, which controls a greater share of the country’s e-commerce market than Amazon does in the US, has been told to completely withdraw from owning media assets, or just divest some of it shareholdings.
“The purpose of our investments in these companies is to provide technology support for their business upgrade and drive commercial synergies with core commerce businesses,” Alibaba said in a statement. “We do not intervene or get involved in the companies’ day-to-day operations or editorial decisions.”
Following the news of the move against Alibaba, first reported by the Wall Street Journal, the chief executive of the SCMP, Gary Liu, emailed staff to say that Alibaba’s “commitment remains unchanged and continues to support our mission and business goals”.
Bloomberg reported on Tuesday that discussions about the sale of the SCMP had been ongoing since last year. The report said no specific buyer had been identified but it was believed to be a Chinese entity. The sale of the 117-year-old paper to a state-owned entity would raise fears of a further curtailment ofHong Kong’s dwindling press freedom.
Hong Kong’s media has been under increasing pressure from Beijing, after the introduction of the national security law last year. The vaguely worded law, which criminalises acts of sedition, secession, foreign collusion and terrorism, has had a chilling effect of press freedom.
Keith Richburg, the director of Hong Kong University’s journalism and media studies Centre, told the Guardian the most important concerns were whether the new owners would give the paper the financial backing and editorial freedom it needed.
“What matters most is whether whoever owns it will respect the SCMP as this city’s premier paper of record since British colonial times, and pledge to respect and uphold its long tradition of editorial freedom and journalistic independence,” Richburg said.
“Clearly there would be a major concern if a mainland Chinese entity without respect for the paper’s traditions and role in society were to take ownership - particularly at a time when voices in China are talking about the need to improve so-called ‘maintenance’ of the media and to ensure ‘patriots’ are running media outlets.”
On Monday, the Communist party leadership issued a warning of a wider crackdown to the Chinese tech companies – which include Tencent, owner of the social messaging service WeChat, and Bytedance, which owns TikTok internationally and its counterpart Douyin in China.
“Some platform companies are growing in an inappropriate manner and therefore bear risks,” the party said, following a meeting chaired by Xi. “It is a considerable problem that the current regulatory regime has failed to adjust.”