As tech giants introduce people to freedom, China rushes to impose fine

Most of us wear blue jeans on a regular basis without giving a second thought. However, years ago, blue jeans was a symbol of freedom.

It penetrated the Soviet Union's iron curtain and in many ways, denim mobilised people in a closed communist country.

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The story comes into relevance now as another communist nation is facing its blue jeans moment and it is responding with ruthlessness.

In this case, the soviet union is a metaphor for China and the blue jeans are symbolic for big tech giants.

For years, Beijing indulged companies such as Alibaba, Tencent, and Baidu. They were advertised as Chinese success stories and companies that could compete with their western rivals, but now all of a sudden they are public enemy number one.

What changed?

Chinese tech giants became too big for their own good. Their influence over the Chinese middle class expanded and their CEOs became celebrities. They were inviting Hollywood stars to corporate events.

However, in China, there is only one alpha —the communist party.

Beijing wanted to cultivate these tech companies as extended arms of the state. However, when things moved in the opposite direction, they cracked down and the first victim was Alibaba.

Alibaba

Its owner, Jack Ma, made a cardinal sin last year as he criticised Chinese regulators. The response was swift. Beijing blocked the IPO of Jack Ma's Ant group. The company was asked to restructure itself as a financial holding company — meaning China's central bank will now oversee the Ant group.

Then, earlier this month, they imposed a record fine on Alibaba. The company had to pay $2.75 billion. Usually, firms contest such penalties and call them unfair and steep. However, Alibaba did neither. They accepted the fine and moved on.

Tencent

A tech giant valued at $776 billion dollars, reports claim China is preparing a substantial fine for Tencent —almost $1.54 billion dollars (10 billion yuan).

The charges range from not reporting acquisitions to anti-competitive practices.

There is no arithmetic logic to the high value of the fine because as per China, the fine must be high enough to set an example. For Alibaba, it was $2.75 billion and for Tencent,it is $1.54 billion.

What's unfolding in China is a battle for influence. This is a country that is built around a single party. The party decides what you eat, what you wear and how you live. It is used to having unlimited control over people's lives.

However, this changed with the arrival of big tech companies that created an alternative world for the Chinese and introduced people to social media, e-commerce, and internet gaming.

As it turned out, this virtual world was a lot more egalitarian and the Chinese citizens loved it, as opposed to their government.

This issue basically boils down to insecurity. The communist party is insecure about the virtual world as it wants to dominate public life once again and the strategy it has chosen is to villainise tech giants.

China’s plans seem to be working, till now, as earlier this month more than 30 Chinese tech companies made a pledge of allegiance to Beijing. They promised to reform themselves and fall in line.

The tech giants are scared of the party because in China politics and economics are two sides of the same coin and this coin is minted by the communist party.

Bringing back the example of blue jeans, if you go to Russia today, everyone is wearing blue jeans because freedom is intoxicating.

Thanks to tech giants, the Chinese people have seen what a free world looks like. So, Beijing is pushing back and it is the most ironic push back ever. A party that has monopolised politics wants to break up monopolies.

A party that snoops on its citizens wants companies to turn off the tracker and a party that rubbishes international laws wants companies to respect regulations. It is the hypocrisy of the highest order.