(pensive music)
- [Narrator] Tech companies do way more
than tech these days.
They're now an indispensable part of our everyday lives
from how we communicate,
to how we shop and pay for things.
Many have grown quickly in less than two decades
and that's especially true in China.
- Alibaba is the biggest e-commerce company in the country
by most measures and runs a system called Alipay,
which is this phenomenally important payments platform.
- [Narrator] Last year, more than 700 million people
used Alibaba's platforms to buy things online.
And more than a billion people used
the FinTech giant Ant Group's mobile app
to make payments, borrow money,
buy insurance and invest.
- We just press Buy.
- [Narrator] Alibaba was founded
by Chinese entrepreneur Jack Ma
and he's Ant's controlling shareholder.
The two companies helped steer the company
into the digital marketplace
and pushed it to become an increasingly cashless society.
(scanner beeping)
Their impact on the economy has drawn the attention
of Chinese regulators,
who like their counterparts in the US,
have been trying to rein in big tech.
- There isn't much really that governments
in Washington and in Beijing can all agree on
but at the moment, a push is underway
to curb the power of the world's biggest tech giants.
China appears to be moving
on a faster timeframe for much of this than the US.
- [Narrator] Here's how China was able
to bring Jack Ma's companies in line
in just a few months.
The main driver of why China can move fast
is because of it's political system.
- China is a highly centralized, one-party state
and so that means in turn
that when the Chinese authorities do decide
to do something, they can sometimes move much faster.
- [Narrator] and that type of speed
when it comes to regulatory action
was on full display with Alibaba and Ant.
(dramatic music)
It all started with this speech by Jack Ma
in October of last year.
(speaking in foreign language)
- [Quentin] In this speech, Jack Ma effectively criticized
the people responsible for overseeing the Chinese economy
and for overseeing his companies.
(speaking in foreign language)
- And as The Wall Street Journal has reported,
that infuriated China's to leaders
and in fact, President Xi Jinping himself
made the decision,
my colleagues have reported,
to scupper the pending IPO of Ant
as a result partly of the speech.
- Ant was supposed to list on Thursday and not anymore.
- [Narrator] What would have been the world's largest IPO
was called off less than two weeks after that speech.
- That kind of direct intervention
by a national-level leader
in what is effectively a commercial process,
it's not like you would necessarily
see something equivalent happening
in the US.
- [Narrator] About two months later,
Chinese regulators came down hard on Ma's two companies.
They criticized Ant's behavior
toward consumers and rivals
and told it to refocus on it payments business
and fix problems in newer ventures.
Regulators also launched an antitrust investigation
into Alibaba, saying the company abused
its dominant market position,
forcing some sellers to operate only on its platforms.
Alibaba didn't comment on the allegations,
while Ant said it appreciated the guidance.
That probe lasted less than four months
and Alibaba was hit with a $2.8 billion antitrust fine
while Ant will soon be directly overseen
by China's central bank.
So for Ma's speech to penalties,
regulators made it all happen in under six months.
- [Quentin] In the US, you might expect some of these things
to last many years.
- [Narrator] Just take a look
at four American big tech giants
that have been accused of anti-competitive behavior
in the digital marketplace.
- The testimony you are about give
is true and correct to the best of your knowledge,
information and belief, so help you God.
- [Narrator] While the usually visible Jack Ma disappeared
after the IPO was scrapped,
in the US, the CEOs were called to a very public hearing
in front of House lawmakers.
- [Quentin] You had four
of the most powerful technology executives
in the world subject to hours of hostile questioning,
which came from both sides of the aisle.
- [Narrator] This hearing came
amid a Congressional fact finding investigation
that had been underway for more than a year.
Remember, Chinese regulators' antitrust investigation
into Alibaba from start to finish took about four months.
At the end of the House Democrats' 16-month probe,
lawmakers concluded that the four companies
had leveraged their dominance
to stamp out competition and stifle innovation.
Republicans said they supported
strong antitrust enforcement targeting the companies.
The four companies disputed the findings.
Since then, there have been a series
of blockbuster lawsuits launched
by US federal agencies and state governments aimed
at enforcing existing antitrust rules
but as of April, US regulators
and lawmakers haven't ordered these companies
to reform their business practices.
- The US is, of course, a democracy
with all of the check and balances
and requirements for transparency
that that involves.
And that means that companies can push back.
- [Narrator] For example, the popular Chinese-owned
video sharing app TikTok.
- We're looking at TikTok,
we may be banning TikTok.
In August last year,
the Trump administration signed an executive order
that could effectively ban Americans from using
and downloading the app.
This was over concerns that user data
could be shared with the Chinese government.
TikTok said that the Chinese government
has never asked for user data
and will refuse such a request.
Within the US legal system, the company fought back.
TikTok filed lawsuits against the order
and less than two months later,
a federal judge blocked the administration's ban.
But for Jack Ma and his companies,
there was no room for appeal.
- Chinese political context,
basically it makes it much harder
for companies or others to push back
if they disagree.
- [Narrator] Alibaba immediately accepted the fine
and said it would invest in measures
to support merchants on its platforms,
while Ant said it would maintain the continuity
and quality of its services
while it fully complies with regulations.
This regulatory assault
has also gone beyond Jack Ma's companies.
A few days later,
nearly three dozen other big tech companies in China
also vowed to comply
with the country's anti-monopoly regulations.
So while these two companies have been shining examples
of Chinese innovation,
from Beijing's perspective,
their success needs to align
with the party's interests.
- If there was a sense
in which it was allowing the private sector
to command bits of the economy,
it is now pushing Alibaba and other companies
to fall more tightly in line
with its own priorities.
It's about making sure that government control
or party control over the Chinese economy is secure.