Anti-monopoly crackdowns are reaching further than just the US and China
Just this week, the Chinese government announced plans to continue some of these massive crackdowns until 2025 to strengthen “important fields" such as science and technological innovation, culture and education.
- Monopolies aren’t exactly a new thing in the news, with companies like Facebook Inc., Amazon.com Inc. experiencing the wrath of the government for their practices. But, anti-monopoly is something that may be a little harder to explain.
- So, there’s a board game called anti-monopoly, and the rules of the game are a great place to start to figure out what exactly “anti-monopoly” is.
- Rather than trying to set up hotel businesses on vacant properties like in Monopoly, players actually act like federal caseworkers that prosecute monopolized businesses on each space to try to return the state of the board to a free market system.
- So basically, if Facebook is the new “boardwalk” in the game, the player wants to raise enough money to bring down the company so that the market becomes more available for competition instead of being dominated by one single company.
- The concept is similar to what’s going on now in the real world, with governments across the globe looking to take down some of these “monopolies.”
What’s going on in the US?
- Anti-monopoly practices, along with investing in infrastructure, seem to be one of the few things that both liberals and conservatives can agree on.
- Some of the biggest targets for anti-monopoly promoters have been tech companies, such as Amazon and Facebook.
- On July 9, United States President Biden signed an executive order (EO) to open up the free market and promote healthy competition for businesses to provide better services for customers.
- The EO was met with little to no pushback from politicians from either side of the aisle because most agree that large monopolies need to be controlled.
- “It’s really amazing, we have something Biden and Trump agree on, they want to go after big tech companies,” said Stephen Moore, economic adviser to former President Donald Trump.
What about China?
- It’s not exactly a secret that China has been cracking down on large tech companies to reign in their dominance.
- In April, technology giant Alibaba Group Holding Ltd. accepted a record 18.23 billion yuan (US$2.8 billion) fine after an investigation found that it had abused its dominant market position for years.
- But, Alibaba isn’t the only tech company to feel the effects of these crackdowns. Tencent Holdings Ltd. and Didi Global Inc. have also felt strain from the Chinese government’s rulings and both have heavily fined as well for their monopolistic practices.
- Just this week, the Chinese government announced plans to continue some of these massive crackdowns until 2025 to strengthen “important fields" such as science and technological innovation, culture and education.
- “A five-year term to the crackdown at least gives definition to the time extent of the regulatory reset,” said Gary Dugan, chief executive officer at the Global CIO Office to Bloomberg. “However, it will be a long time for investors to fret about pending changes.”
Is it happening everywhere?
- India is another country that has taken extra measures to make sure monopolies don’t hold too much power in the market through their anti-monopoly watchdog, the Competition Commission of India (CCI).
- The goals of the government group are to “ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.”
- The CCI has recently taken on Flipkart and Amazon because they think the two companies are preventing healthy competition, and the Supreme Court recently ruled in favor of the CCI’s probe. Both companies have denied any wrongdoing.
- Even Japan’s anti-monopoly watchdog has been showing more activity as they start a probe into whether or not larger companies are actually financially prepared for their initial public offering (IPO) process.
What comes next?
- As far as the US is concerned, Biden announced that anti-monopoly advocate Lina Khan would lead the Federal Trade Commission (FTC) under his administration, another decision that received a lot of support from both Republicans and Democrats.
- Khan’s presence in the FTC has obviously also concerned Facebook and Amazon because both companies have already issued requests with the FTC demanding that she recuse herself from any decisions involving them.
- China’s also still moving forward with its anti-monopoly crackdown with some investors taking comfort in knowing that the government is aiming to be more transparent about its plans.
- “The State Council’s statement provides a guiding context to interpret current regulatory thrusts,” said Michael Norris, an analyst with AgencyChina. “In our view, investor concerns are driven less by proposed regulations’ substance, and more by cadence and communication. We view this announcement as doing a better job telegraphing future regulatory hot spots.”
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