China will require the country’s biggest internet firms to get approval for any investment deals they make as part of new rules that are likely to keep Big Tech firms from getting even bigger through acquisition, people familiar with the issue told The Wall Street Journal Wednesday (Jan. 19).
The Cyberspace Administration of China, the company’s top internet regulator, recently enacted a new protocol that means internet companies must obtain formal approval for investment deals if they have 100 million users or more or have posted revenue of at least 10 billion yuan ($1.57 billion) in the past year, the people told WSJ. Some companies were notified of the changes this week, the report says.
The new rules would affect China’s biggest tech companies, including Tencent Holdings Ltd., Alibaba Group Holding Ltd. and ByteDance Ltd., all of which have at more than 1 billion active users. The Cyberspace Administration of China said on WeChat that it hasn’t publicly announced any new rules. Tencent and Alibaba didn’t respond to WSJ’s requests for comment.
A spokesperson for Beijing-based ByteDance, which operates video platform TikTok, said Wednesday it’s dismantling the strategic investment team, its corporate venture capital arm, a move people said is in response to the new rules. Dozens of employees will either be transferred or laid off.
Related: China’s 5-Year Plan Focuses on Building a Digital Economy
Meanwhile, China’s General Office of the State Council announced this week that the digital economy should be in place by 2025 and is expected to account for 10% of gross domestic product if it’s launched successfully.
China’s five-year plan points to digital innovation and says it must play a larger role in leading economic development and focus on the integration between digital technology and the real economy.
The plan includes efforts to speed up the creation of an information network infrastructure, along with a national, integrated big data center system designed to coordinate data, computing power, algorithms and application resources. Large companies will be encouraged to build integrated digital platforms to accelerate digital transformation and upgrade commerce.
China’s plan says construction of smart cities, parking lots and charging centers will be encouraged in newly built residential areas. Digitization of public services is also a priority, China said, and efforts will be made to ensure digital social services benefit reach more beneficiaries.
China is also looking to build a more controllable platform for nonfungible tokens (NFTs).
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