An arm of the Cyberspace Administration took 1 per cent of an Alibaba subsidiary in Guangzhou. Discussions are underway about a similar stake in a Tencent subsidiary, said a person familiar with the matter.
Chinese government entities are set to take so-called “golden shares” in units of Alibaba and Tencent, suggesting Beijing is moving to ensure greater control over key players in the world’s largest internet arena, according to Bloomberg.
That share structure, which in theory allows the government to nominate directors or sway important company decisions, could grant officials a tool to influence the industry over the longer term.
An arm of the Cyberspace Administration of China took 1 per cent of an Alibaba digital media subsidiary on January 4. The company’s media portfolio includes businesses such as streaming platform Youku and mobile browser UC Web. A new director who shares the name of a CAC official was appointed that same day.
Discussions are also underway about a government entity taking a similar stake in a Tencent subsidiary in mainland China. ByteDance (owner of TikTok) and its rival short video platform Kuaishou have already sold "golden shares" to the Chinese government.
Chinese regulators retreat from the heavy-handed fines and tough sanctions against the biggest tech companies, but have not indicated they will entirely loosen up control of the industry. Instead, China’s internet regulator has moved to take small equity stakes in many of the biggest companies and is installing government officials as board members to supervise their operations, including at Alibaba and Tencent.
The question now is whether the policy overhaul represents a swing toward flexibility or simply a knee-jerk response to a deteriorating economy, says Bloomberg.