Billionaire Surveillance: China Tracks Its Tech Moguls

For a number of weeks now, Beijing has been trying to regain control of its internet heroes, who are considered too dominant. E-commerce giants and their standard-bearer, Alibaba and its founder Jack Ma, are directly in the line of fire.

Jack Ma at the 20th anniversary of Alibaba Group celebrations in 2019
Frédéric Lemaître

BEIJING — The tides are turning for Chinese tech giants. Previously cherished by a regime whose achievements they embody, Alibaba, Tencent, Meituan and have become victims of their success. To everyone's surprise, their spiritual father, the Chinese Communist Party, is currently dishing out a series of reprimands to try to intimidate them to fall in line.

Logically, the best victim to make an example of is the biggest: Jack Ma, president of Alibaba, the Chinese equivalent of Amazon. On Nov. 3, less than 48 hours before the historic IPO of its financial subsidiary, Ant, supervisory authorities humiliated Ma by blocking the operation. This move deprived the Chinese billionaire of an additional 37 billion dollars. This decision was made by President Xi Jinping himself, according to the Wall Street Journal.

But other giants are being targeted too. With the experimental launch of a cryptocurrency by the People's Bank of China (the country's central bank) in early October and the opening of a debate on the protection of personal data on Oct. 20, the time for regulation and regaining control has come. This month also saw the publication of a draft law on the regulation of the FinTech industry and another draft law on monopolies.

Like the United States, China realizes that after having initially nurtured competition, it has seen its internet giants establish oligopolies that end up hindering it. "Twenty-five years ago, America's tech companies took risks and disrupted established business models. Today, they are the new public services, earning revenue from their monopolies by controlling markets. China wants to avoid the American trap," writes economist David Goldman in the Japanese publication Asia Times.

"The Chinese internet giants are less international than the American ones but they do have a higher diversity of offerings," says Jean Dominique Seval, director and founder of Soon Consulting, a consulting firm specializing in the Chinese market. "They are ahead of the Americans in finance, health and self-driving cars. They are very powerful. Alibaba and account for 75% of all e-commerce. WeChat, a subsidiary of internet and mobile services specialist Tencent, handles 60% of all payments in China." Alibaba alone accounts for 20% of all retail trade in China, compared to the 5% held by Amazon in the U.S.

This latest storm had been brewing for several weeks. The situation came to a head on Oct. 24, during a financial forum in Shanghai. In one of his rare public appearances, Chinese Vice-President Wang Qishan warned of "systemic financial risks." He knows what he is talking about: in 2008, as vice-premier of the State Council, he oversaw the management of how the global financial crisis was hitting China.

China wants to avoid the American trap.

Speaking shortly after Wang's statement, Jack Ma accused the state-owned banks of acting as "pawnbrokers." Above all, he argued that there is no systemic risk as finance is not, in his view, a "system." If innovators don't fear supervision now, Ma says, "they fear supervision in the future." Publicly lashing out against Wang, one of President Jinping's closest associates, at a time when several laws were in the works may not have be the most cautious move.

Already, the central bank's launch of a virtual yuan to 50,000 Chinese and 3,000 stores in Shenzhen has been an obvious thorn in the side for WeChat and Alipay, Alibaba's payment system, which together controls 94% of online payments. "After numerous legislative attempts in recent years, the digital currency is the first technological attempt by China's top financial institute to contain their fast-growing influence," writes Kai von Carnap of the German Mercator Institute for China Studies in a Nov. 9 memo. "This digital currency lends itself as an ideal vehicle to regain some control over financial security and stability the way Xi Jinping understands it – through party-state-controlled technology – and for making the central bank the hub of the underlying financial data ecosystem."

Data is at the heart of the debate. Tencent and Alibaba know the incomes and spending patterns of Chinese households better than anyone else. Thanks to their mastery of artificial intelligence, they are better able than banks to establish customer risk in record time. For the majority of Chinese people, cash and credit cards are distant memories.

Alibaba and account for 75% of all e-commerce — Photo: Santarpan Roy/ZUMA Wire

But customers are beginning to become aware of the other side of the coin. They have realized that they pay more for some products sold by Alibaba just because algorithms associate, for example, iPhone ownership with higher purchasing power — and charges accordingly. They get frustrated when they can't pay with WeChat for a product ordered on Taobao (Alibaba). Financial professionals are starting to rebel against the unfair competition created by these intermediaries who have become indispensable and take no risks.

The debate over protecting personal data is another aspect of the growing examination of tech giants. This new law will be the first to specifically address this key problem. It is crucial, even if it mainly harmonizes existing practices. The main innovation is that it also applies to foreign companies selling goods and services to people in China and limits the transfer of data abroad.

Unveiled in November, the draft bills on fintech and monopolies are more ambitious. The first one obliges online lenders like Ant to no longer be only intermediaries between banks and individuals but to take a risk by providing at least 30% of the credit granted. Currently, Ant records only 2% of the number of loans on its balance sheet. Firms will also have to agree to disclose the amount of these loans to the People's Bank of China, which Ant has refused to do until now.

According to the People's Bank of China, the amount of consumer loans granted by banks through technology platforms has reached 1.4 trillion yuan (about 213 billion dollars). "The transformation towards digital finance is filled with difficulties and challenges," said Liang Tao, vice-president of the Banking and Insurance Regulatory Commission, during a financial forum on Nov. 11. He added that "this is particularly true of cybersecurity, data protection and market monopolies."

This date was probably not chosen at random. Nov. 11 is "Singles Day," the commercial "holiday" during which Alibaba doubles down on commercial promotions, beats all sales records and strangles a little more of the competition. Just the day before a draft law was published that — subject to consultation — will provide for limiting certain anti-competitive practices. In the line of fire are the exclusivity clauses that the tech giants impose on merchants, the segmentation of consumers based on behavioral and personal data harvested by the platforms, and forced bulk sales.

The emergence of AI, big data and algorithms has enabled big platforms to entrench their monopolies.

According to an internal memo (shared with the Asia Times) that banking competition authorities sent policymakers, "the emergence and fast adoption of artificial intelligence, big data technology as well as related algorithms in recent years have enabled big companies and their platforms to further entrench their lead and monopolies, to the point that newcomers are simply unable to compete."

COVID-19 has also favored online commerce, and the arrival of 5G, which requires significant investment by companies, is likely to further increase the tech moguls' comparative advantage, both because of their technological know-how and the ever-increasing amount of data they will be able to collect.

The investment bank Morgan Stanley has looked closely at these new legislative provisions and tried to assess their impact on the implicated companies. According to their recent report, Alibaba should not suffer much due to "the already fiercely competitive environment in e-commerce nowadays." Tencent, which has a strong presence in online entertainment, is also unlikely to see its business suffer from the new regulations. "The impact on Tencent could be relatively manageable, except for the potential misuse of user data across platforms, or blocking competitors access to the WeChat ecosystem," notes the American financial institution.

The situation could be more problematic for Pinduoduo and, to a lesser extent,, two challengers that attract merchants with subsidies. "If the rules limit the use of the subsidies provided by the platforms, we think that the potential limitation will affect Pinduoduo in particular because the 10 billion yuan subsidy announced by the company in 2019 is one of its central strategies to stimulate user engagement," the bank said. There is also Meituan, an online sales platform specializing in meal delivery. "We note the potential implementation of new antitrust regulations could also weigh on Meituan's take rate charged to merchants," writes Morgan Stanley.

Like the United States, China intends to reframe its national champions while ensuring that they remain champions. As Soon Consulting director Jean Dominique Séval points out, the Chinese giants remain national. "They have attacked Asian countries, are starting to look at the countries participating in the ‘new silk roads' and are little present in the rest of the world." Forced to slow down their ambitions in the Middle Kingdom, the Chinese giants could take advantage of their financial power to conquer the rest of the planet. Provided, of course, that they first get the green light from the Chinese Communist Party.

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La Sagrada Familia Delayed Again — Blame COVID-19 This Time

Hopes were dashed by local officials to see the completion of the iconic Barcelona church in 2026, in time for the 100th anniversary of the death of its renowned architect Antoni Guadí.

Work on La Sagrada Familia has been delayed because of the pandemic

By most accounts, it's currently the longest-running construction project in the world. And now, the completion of work on the iconic Barcelona church La Sagrada Familia, which began all the way back in 1882, is going to take even longer.

Barcelona-based daily El Periodico daily reports that work on the church, which began as the vision of master architect Antoni Gaudí, was slated to be completed in 2026. But a press conference Tuesday, Sep. 21 confirmed that the deadline won't be met, in part because of delays related to COVID-19. Officials also provided new details about the impending completion of the Mare de Déu tower (tower of the Virgin).

El Periódico - 09/22/2021

El Periodico daily reports on the latest delay from what may be the longest-running construction project in the world.

One tower after the other… Slowly but surely, La Sagrada Familia has been growing bigger and higher before Barcelonians and visitors' eager eyes for nearly 140 years. However, all will have to be a bit more patient before they see the famous architectural project finally completed. During Tuesday's press conference, general director of the Construction Board of the Sagrada Familia, Xavier Martínez, and the architect director, Jordi Faulí, had some good and bad news to share.

As feared, La Sagrada Familia's completion date has been delayed. Because of the pandemic, the halt put on the works in early March when Spain went into a national lockdown. So the hopes are dashed of the 2026 inauguration in what would have been the 100th anniversary of Gaudi's death.

Although he excluded new predictions of completion until post-COVID normalcy is restored - no earlier than 2024 -, Martínez says: "Finishing in 2030, rather than being a realistic forecast, would be an illusion, starting the construction process will not be easy," reports La Vanguardia.

But what's a few more years when you already have waited 139, after all? However delayed, the construction will reach another milestone very soon with the completion of the Mare de Déu tower (tower of the Virgin), the first tower of the temple to be completed in 44 years and the second tallest spire of the complex. It will be crowned by a 12-pointed star which will be illuminated on December 8, Immaculate Conception Day.

Next would be the completion of the Evangelist Lucas tower and eventually, the tower of Jesus Christ, the most prominent of the Sagrada Familia, reaching 172.5 meters thanks to an illuminated 13.5 meters wide "great cross." It will be made of glass and porcelain stoneware to reflect daylight and will be illuminated at night and project rays of light.

La Sagrada Familia through the years

La Sagrada Familia, 1889 - wikipedia

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