China’s biggest tech companies lost more than $50 billion in market value Tuesday after the government proposed sweeping new rules to further curb anti-competitive behavior among big internet firms.
The latest effort to clamp down on the sector comes from the State Administration for Market Regulation (SAMR), which has spearheaded the government’s antitrust campaign against Big Tech.
The rules announced Tuesday would forbid business operators from faking statistics or information about their product orders, sales and user reviews to mislead customers. They would also be banned from fabricating consumer views to hurt the reputations of their rivals.
Other practices targeted include using data, algorithms or other means to redirect web traffic from their rivals or create obstacles that would prevent customers from installing or running rival services.
SAMR said the rules are intended to stamp out “unfair competition.”
The regulator also proposed banning a practice known as “choosing one from two,” in which companies make exclusive agreements with merchants that prevent them from selling on rival e-commerce platforms. SAMR investigated Alibaba (BABA) over such issues earlier this year, eventually slapping the company with a record $2.8 billion penalty.
Businesses that “seriously” violate the rules would be forced to publicly apologize and commit to fixing their issues, in addition to whatever punishment regulators decide, SAMR added.
Chinese tech stocks — which have crashed during the escalating crackdown over the past nine months — fell further in Hong Kong following the news. Tencent (TCEHY) tumbled about 4%, while Alibaba fell 4.8%. JD.com lost 5.2%, and Meituan shed 3.5%.
SAMR, which was established in 2018, has dramatically stepped up antitrust scrutiny of the country’s tech champions since late last year, when President Xi Jinping called for the reining in of the “disorderly expansion” of private capital.
In addition to April’s record fine on Alibaba, SAMR has imposed a series of fines or restrictions on other internet giants — including Tencent, Didi, Meituan and Pinduoduo (PDD) — for alleged anti-competitive behaviors.
The antitrust campaign is part of a broad crackdown by Beijing that has rocked Chinese business. An onslaught of regulations have hit industries ranging from tech and financial services to private tutoring.
The government has cited a need to safeguard national security and protect the interests of its people. Regulators have widely blamed the private sector for creating socioeconomic problems that could potentially destabilize society and affect the ruling Chinese Communist Party’s grip on power.
But the unprecedented crackdown on private enterprise has rattled global investors and triggered fears about the future of innovation in China, as well as the ability for companies to tap capital markets.