Cautionary Tale! Judging By What Happened To Jack Ma & Alibaba, China’s Tech Companies Are In The Crosshairs Of Their Government.

Jack Ma, founder of Chinese e-commerce firm Alibaba Group, attends a conference to commemorate the 40th anniversary of China's Reform and Opening Up policy at the Great Hall of the People in Beijing, Tuesday, Dec. 18, 2018. Ma hasn't been seen since he angered regulators with an October 2020 speech. That is prompting speculation about what might happen to the billionaire founder of the world's biggest e-commerce company. (AP Photo/Mark Schiefelbein)

Chinese technology firms are squarely on notice from the government: comply or face the consequences.

Whether market-wise or politically motivated – or a combination – the tech sector has seen what can happen to them.

Chinese regulators punished billionaire Jack Ma, first with a $2.8 billion fine assessed to his e-commerce giant Alibaba, and then early this week to is digital payments firm Ant Group, an Alibaba offshoot.

Ant Group now will undergo a major restructuring with regulators forcing it to act more like a bank than a tech firm.

A day after that, on Tuesday, officials put out a warning to 34 high-profile tech companies, according to BBC News, that they have a month to “self-reflect” and comply with China’s new rules.

Alibaba, with more than 800 million users in China, was cited for restricting merchants from doing business or running promotions on rival platforms.

So, what about the motivation?

In a BBC News report, the moves are seen as smart for China’s future business profile, but also raise questions concerning a power grab.

“If you read the laws, Chinese regulators are trying to be more forward looking and think ahead, in an attempt to regulate an industry that is moving so fast,” says Rui Ma, tech analyst and co-host of the podcast Tech Buzz China.

But the moves also are an indication that under President Xi Jinping, nothing should push aside the Communist Party.

The virtual influence of the top companies “puts them in direct competition with the Chinese Communist Party,” BBC News wrote, adding that sources in China’s financial circles believe Ma may have “irked a lot of the top leadership in Beijing” when he made a speech dismissing the traditional banking sector last year.

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