Chinese language tech giants look preempt regulators with enterprise adjustments

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This image shows the logo of the Chinese tech company Tencent on an Android mobile device with the flag of the People’s Republic of China in the background.

Budrul Chukrut | SOPA pictures | LightRakete | Getty Images

GUANGZHOU, China – Chinese tech giants want to change their business models and work practices to prevent regulatory action when authorities crack down on the once-free-running sector.

Over the past year, regulators introduced new rules in areas from antimonopoly for internet companies to data security targeting large tech companies.

And the punishment came quickly. Ant Group’s record-breaking IPO was withdrawn by regulators in November, while Alibaba was fined $ 2.8 billion for an anti-monopoly investigation.

Ride-hailing giant Didi became the subject of a cybersecurity review days after its massive US IPO. And China’s leading cyberspace regulator ordered app stores this month to suspend Didi’s download.

With regulators on the backs of tech companies, companies have tried to appease the authorities.

Tencent tried to tighten its patrol of minors playing games this month. According to Chinese regulations, minors are not allowed to play online games between 10 p.m. and 8 a.m. According to Tencent, one of the largest game companies in the world, there are cases where children use adult accounts to play.

To counter this, the company is asking the gamer to do a facial recognition scan on their phone to see if they are an adult.

In recent years, China’s government has been concerned about video game addiction and how it could harm children’s health. In 2018, regulators froze video game approval in China over concerns about violence in some titles, as well as potential addiction and rising cases of myopia. Games in China must be approved by the censorship in order to be published and monetized.

Tencent appears to be ahead of all further regulatory measures with its recent moves.

Anti-monopoly focus

In February, regulators published antimonopoly rules for Internet platforms. Beijing is concerned about the size and power of China’s tech companies, which have grown to be some of the largest in the world and are largely unencumbered by regulation.

The focus of the Alibaba investigation, which concluded in April and resulted in a $ 2.8 billion fine, was a practice forcing traders to choose one of two platforms on which to sell their goods.

Alibaba and Tencent have both effectively built walls around their products. For example, users cannot use Tencent’s WeChat Pay service on Alibaba’s Taobao e-commerce site.

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However, it appears that both Tencent and Alibaba could attempt to forestall possible further antitrust measures.

The Wall Street Journal reported Wednesday that Alibaba and Tencent are trying to loosen some of those blockades on each other’s products. This could include approving WeChat Pay as an option for Alibaba’s shopping services.

“Such self-regulatory measures would be ahead of the regulatory curve, as Tencent often does – and Alibaba wasn’t,” said Neil Campling, director of technology, media and telecommunications research at Mirabaud Securities Limited, in a statement on Wednesday.

996 work culture

Tech companies are also trying to change the long-standing practice of grueling work hours known as 996.

This applies to employees who work six days a week from 9 a.m. to 9 p.m. Alibaba founder Jack Ma once described the 996 culture as a “great blessing”, but has been heavily criticized.

On Tuesday, Ling Zhenguo, a member of China’s leading political advisory body known as the Chinese People’s Political Consultative Conference, wrote a comment in the company’s official newspaper apparently criticizing the 996 culture.

The internet economy should “put people first,” not “associate every profit with every hardworking minute of employees,” according to a CNBC translation of the Mandarin article.

“We need to be aware that contrary to the market economy with Chinese characteristics, seeing people’s legs as wheels and hands as robots,” added Ling, saying that people should be treated like people.

Ling’s article highlights how the 996 work culture might be targeted next by Beijing.

But tech companies have already started tweaking their practices.

Last week, TikTok owner ByteDance said that starting August 1st, the “big week, little week” practice will end. Here workers would work and be paid every other Sunday. According to local media, the short video app Kuaishou also lifted this policy last month.

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