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China is poised to take “golden shares” in its two biggest tech companies, Alibaba and Tencent, as Beijing expands its influence over the country’s star tech companies and its most powerful and wealthy business people.
The move by Beijing marks a move away from heavy fines and sanctions in a two-year crackdown on the technology by which Alibaba founder Jack Ma has criticized regulators.
The attack has sparked turmoil at Chinese tech companies, with billions in value lost, and measures including a freeze on May’s financial services firm Ant Group’s bid for what would have been the world’s largest IPO.
Earlier this week, fintech company Ma announced that Ma, once a Chinese tycoon but now living in exile in Japan, would take over the company.
But the government’s approach has weakened foreign investment and the competitiveness of China’s technology market, leading to a shift in condescension and tactics to control the big tech giant.
Beijing recently took a small equity stake in Twitter-like Weibo and ByteDance, the private parent of Tik Tok, known in China as Duyin, in a bid to keep the government more directly involved in the business.
The move to take a 1% stake in Alibaba and Tencent’s local operations has been dubbed “golden shares” because they have exclusive rights over business decisions.
In China, the shares are known as “special management shares” and have been used to influence the government since 2015.
In the year On January 4, a unit under the State Investment Fund set up by China’s regulator Cyberspace Administration acquired 1% of Alibaba subsidiary Guangzhou Lujiao Information Technology.
Alibaba owns social media entities including Youku, dubbed China’s YouTube, and UCWeb, a web browser.
The state is taking a similar approach to Tencent, which operates China’s most popular streaming service, Tencent Video, and other offerings including WhatsApp-like WeChat, music streaming and games – according to the Financial Times.
The government also has a stake in Kuaishou, a local entity owned by the state-owned Beijing Radio and Television station, which is a minor rival to Baitdance Duyin.
Streaming service Bilibili, the Nasdaq-listed business that began as a subculture destination for anime, game and comedy fans, is pushing for a Shanghai-based state body to take shares in one of its branches, the FT reported.
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