China slaps heavy fines on ByteDance, Tencent, and Baidu

China’s antitrust regulator fined some of its largest tech giants including Tencent Holdings Ltd., Baidu Inc., ByteDance Ltd. and Didi Chuxing for past acquisitions and investments as it stepped up its crackdown on the sector.

Pony Ma’s Tencent is being fined 500,000 yuan ($77,000) for its 2018 investment in online education app Yuanfudao, according to a statement by the State Administration for Market Regulation on Friday.

Baidu was fined the same amount for its 2014 takeover of Ainemo Inc., a maker of consumer electronics including voice-controlled speakers.

The firms are being censured for not seeking prior approvals for the deals — a violation of country’s anti-monopoly laws — though the regulator had determined the deals themselves aren’t anti-competitive.

Tencent and Baidu join fellow behemoth Alibaba Group Holding Ltd. in coming under fire from the country’s powerful antitrust regulator, as Beijing steps up efforts to rein in its once free-wheeling technology industry.

The regulator had last year issued fines against Alibaba as well as Tencent unit China Literature Ltd. for similar violations.

Didi Mobility Pte, a unit of ridehailing giant Didi Chuxing, and Japan’s SoftBank Corp. were also issued fines of 500,000 yuan each — the maximum penalty possible — for setting up a joint venture without permission.

A ByteDance unit and its partner Shanghai Dongfang Newspaper Co. were also penalized the same amounts for a 2019 partnership that created a video-copyright venture. ByteDance said the joint venture has since been canceled.

Technology companies like Tencent had previously carried out mega mergers and acquisitions through so-called Variable Interest Entity structures, which operate on shaky legal grounds.

The new antitrust rules, accompanied by the fines handed down by the regulators, are a signal VIEs are now under their oversight.

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