![]() Clearly, unfettered power in the hands of a few tech company moguls cannot be good for society. We believe that tightening regulations will be good for the industry and consumers alike in the long run. Global tech giants Facebook, Amazon, Apple, Microsoft and Alphabet’s Google (the “FAAMG” group) have all faced increasing regulatory scrutiny on varying issues such as alleged platform dominance, anti-competitive behaviour, data privacy and the spread of misinformation. It is no surprise that the Chinese government has started to take action against the powerful technology platforms, but in reality this has been a global reckoning. ![]() JD.com and Pinduoduo already act as a counter to Alibaba’s dominance, as evidenced by their growing market share at the expense of Alibaba’s. While the capital requirement for Ant Group is a prudent step and we believe will likely be enforced, we are less concerned about the impact of the new antitrust guidelines. The regulator has warned most other internet companies on anti-competitive behaviour as well. Notably in China last year, Alibaba was hit by the halt of Ant Group’s IPO, increasing antitrust regulatory pressure and a multi-billion dollar fine. This cash burn is simply unsustainable in the long run. ![]() Fierce competition and a “winner takes all” mind-set means that participants have had to dole out huge sums to subsidise sales (often to below cost) in order to cross-sell services to their broad customer bases and continue to secure high growth rates.
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