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China Tells Tech Giants to Stop Blocking Rivals' Links on Their Digital Platforms

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China Tells Tech Giants to Stop Blocking Rivals’ Links on Their Digital Platforms

China fired a fresh regulatory shot at its tech giants on Monday, telling them to end a long-standing practice of blocking each other’s links on their sites or face consequences.

The comments, made by the Ministry of Industry and Information Technology (MIIT) at a news briefing, mark the latest step in Beijing’s broad regulatory crackdown that has ensnared sectors from technology to education and property and wiped billions of dollars off the market value of some of the country’s largest companies.

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China’s Internet is dominated by a handful of technology giants which have historically blocked links and services by rivals on their platforms.

Restricting normal access to Internet links without proper reason “affects the user experience, damages the rights of users and disrupts market order,” said MIIT spokesperson Zhao Zhiguo, adding that the ministry had received reports and complaints from users since it launched a review of industry practices in July.

“At present we are guiding relevant companies to carry out self-examination and rectification,” he said, citing instant messaging platforms as one of the first areas they were targeting.

He did not specify what the consequences would be for companies that failed to abide with the new guidelines.

The MIIT did not name any companies, but the 21st Century Business Herald newspaper reported on Saturday that Alibaba and Tencent were among the firms told to end the practice by an unspecified time last week.

Shares in Alibaba Group and Tencent Holdings fell on Monday by over 6 percent and 3 percent respectively against a 3 percent decline in the Hang Seng Tech Index.

The practice targeted by the MIIT is common.

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Tencent restricts users from sharing content from ByteDance-owned short video app Douyin on Tencent’s instant messaging apps WeChat and QQ. In February, Douyin filed a complaint with a Beijing court saying that it constituted monopolistic behaviour. Tencent has called those accusations baseless.

In other cases, Alibaba’s Taobao and Tmall e-commerce marketplaces do not allow Tencent’s payment service WeChat Pay to be used as a payment option.

Tencent said it supported the MIIT’s guidance and would make the necessary changes in phases.

An Alibaba spokesperson referred Reuters to remarks made by CEO Daniel Zhang on August 3, when he said rectification was “highly necessary”.

“Forced cracks in China’s walled gardens has the potential to re-write China’s digital advertising and e-commerce landscapes,” said Michael Norris, research and strategy manager at Shanghai-based consultancy AgencyChina.

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“In the short term, all eyes will be on Tencent as it comes to grips with what it means to open WeChat to Alibaba and ByteDance.”

The MIIT also said on Monday that China had “too many” electric vehicle (EV) makers and the government will encourage consolidation.

© Thomson Reuters 2021


This week on Orbital, the Gadgets 360 podcast, we discuss iPhone 13 leaks and what we expect from the Apple event. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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RBI Seeks Public Opinion on Fees, Charges in Payments Systems: All Details

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The Reserve Bank on Wednesday sought views from the public on fees and charges in payment systems, with an aim to make such transactions affordable as well as economically remunerative for the entities involved. The payment systems include Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) system, Real Time Gross Settlement (RTGS) system and Unified Payments Interface (UPI). Debit cards, credit cards and Prepaid Payment Instruments (PPIs) are among the other payment instruments.

The focus of RBI’s initiatives in the payment systems has been to ease frictions which may arise from systemic, procedural or revenue-related issues, the central bank said while releasing a discussion paper on ‘Charges in Payment Systems’.

The Reserve Bank of India (RBI) has sought public views on 40 specific questions with regard to charges and levies in payment systems by October 3.

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While there are many intermediaries in the payments transaction chain, consumer complaints are generally about high and non-transparent charges.

RBI stressed that charges for payment services should be reasonable and competitively determined for the users, and provide optimal revenue stream for the intermediaries.

“To ensure this balance, it was considered useful to carry out a comprehensive review of the various charges levied in the payment systems by highlighting different dimensions and seeking stakeholder feedback,” it said.

Charges in a payment system are the costs imposed by the Payment Service Providers (PSPs) on the users (originators or beneficiaries), for facilitating a digital transaction. The charges are recovered from the originators or the beneficiaries depending on the type of payment system.

In a funds transfer payment system, the charges are generally recovered from the originator of the payment instruction. These are usually levied as an add-on to the amount earmarked for remittance.

In the case of a merchant payment system, the charges are usually recovered from the final recipient of money (merchant). This is done by deducting the same from the amount receivable by the merchant or a discount to the amount receivable by the merchant.

Entities involved in providing digital payment services incur costs, which are typically recovered from the merchant or the customer or is borne by one or more of the participants.

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While there are both advantages and disadvantages of customers bearing these charges, they should be reasonable and should not become a deterrent in the adoption of digital payments, the RBI had said earlier.


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Tencent Cuts 5,500 Jobs in First Quarterly Workforce Decline Since 2014 as Revenue Falls

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Chinese tech giant Tencent on Wednesday posted its first drop in quarterly revenue since going public, as the company grapples with China’s economic downturn, pandemic disruptions and ongoing scrutiny from regulators. Revenue in the second quarter fell three percent to CNY 134 billion (roughly Rs. 1,57,000 crore) compared to the year before, while profits plunged by 56 percent to CNY 18.6 billion (roughly Rs. 21,800 crore), an earnings statement said.

Tencent also cut around 5,500 jobs down to 110,715 employees by the end of June, the first quarterly decline in workforce since 2014.

“We actively exited non-core businesses, tightened our marketing spending, and trimmed operating expenses, enabling us to sequentially increase our non-IFRS earnings, despite difficult revenue conditions,” the company said in the statement.

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Around half of Tencent’s revenues came from fintech and business services as well as online advertising, which would position the company for growth when China’s economy expands, the company added.

China has spent months cracking down on the video game industry to fight addiction among children, cutting into profits of giants like Tencent and its rival NetEase.

Beijing started approving new video games again in April after a hiatus, but no Tencent games were on the list, meaning it must rely on older titles like Honor of Kings for revenue.

Tencent said China’s domestic gaming market was facing “transitional challenges”, while the international market was in a “post-pandemic digestion period” as people resumed spending on other entertainment avenues.

Online advertising revenue fell a record 18 percent in the second quarter year-on-year, which reflected “notable weakness in the Internet services, education and finance sectors”, the firm added.

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“Tencent has tightened its belt as the Chinese tech industry embraces a downturn,” Analyst Willer Chen at Forsyth Barr Asia told Bloomberg News.

“The company’s performance now largely depends on its progress on cost control and operation optimisation.”

Tech sector reeling

Tencent is among the biggest names in China’s tech industry that is still reeling from Beijing’s regulatory crackdown, which began in late 2020 to target anti-competitive practices and put an end to a decade of freewheeling growth.

The regulatory actions have wiped more than $1 trillion (roughly Rs. 79,43,800 crore) off the combined market value of the country’s tech giants in 2021, according to Bloomberg News estimates — though Tencent has retained the crown as China’s most valuable company.

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The latest economic slump has further damaged bottom lines for the sector’s biggest firms, with Alibaba Group earlier this month reporting flat quarterly revenue growth for the first time.

Shares in Tencent rose less than 0.1 percent in Hong Kong before the Wednesday results announcement.

The announcement came a day after news broke that Tencent plans to sell all or much of its $24 billion (roughly Rs. 1,90,600) stake in Chinese food delivery giant Meituan.

The Hong Kong-listed shares of Meituan fell more than 10 percent on Tuesday following the news, while Tencent dipped slightly before recovering.

Tencent went public in Hong Kong in 2004 and enjoyed double-digit growth for much of China’s decades-long internet boom, dominating the market with instant messaging app WeChat and its roster of games.

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Earnings data on the company’s performance before its listing on the stock exchange is not publicly available.


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Amazon Claims ‘Overly Broad and Burdensome’ FTC Probe of Amazon Prime Service Hounding Jeff Bezos, Others

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Amazon has complained to federal regulators that they are hounding company founder Jeff Bezos and senior executives, making “impossible-to-satisfy demands” in their investigation of Amazon Prime, the popular streaming and shopping service with free delivery and an estimated 200 million members around the globe.

The Federal Trade Commission has been investigating the sign-up and cancellation practices of Amazon Prime starting in March 2021 with the issuance of civil subpoenas, the biggest online retailer and tech giant disclosed in a petition to the agency filed earlier this month.

The petition asks the FTC to cancel, or extend the deadline for answering, subpoenas sent last June to Bezos, Amazon’s former CEO, and current CEO Andy Jassy. It says the FTC “has identified no legitimate reason for needing their testimony when it can obtain the same information, and more, from other witnesses and documents.”

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Jassy took over the top position at Amazon from Bezos, one of the world’s richest individuals, in July 2021. Bezos became executive chairman.

The FTC investigation has widened to include at least five other subscription programmes, according to Amazon: Audible, Amazon Music, Kindle Unlimited, Subscribe & Save, and an unidentified third-party programme not offered by Amazon. The regulators are asking the company to identify the number of consumers who were enrolled in the programmes without giving their consent, among other customer information. In June, agency staff sought to serve subpoenas on nearly 20 current and former Amazon employees, at their homes, with dates for them to give testimony in coming weeks, the petition says.

Amazon says in the petition it has worked “diligently and cooperatively” with FTC staff for more than a year to provide information relevant to the probe, offering up some 37,000 pages of documents. It calls the information demanded in the subpoenas “overly broad and burdensome.”

Amazon blames the standoff on “unexplained pressure placed on staff to complete the investigation hastily, by an arbitrarily chosen deadline.”

FTC spokespeople didn’t immediately respond to a request for comment Tuesday.

With an estimated 150 million US subscribers, Amazon Prime is a key source of revenue, as well as a wealth of customer data, for the Seattle-based company, which runs an e-commerce empire and ventures in cloud computing, personal “smart” tech and beyond. Amazon Prime costs $139 (roughly Rs. 11,000) a year. The service added a coveted feature this year by obtaining exclusive video rights to the NFL’s “Thursday Night Football.”

Last year, Amazon asked unsuccessfully that FTC Chair Lina Khan step aside from separate antitrust investigations into its business, contending that her public criticism of the company’s market power before she joined the government makes it impossible for her to be impartial. Khan was a fierce critic of tech giants Facebook (now Meta), Google and Apple, as well as Amazon. She arrived on the antitrust scene in 2017, writing an influential study titled “Amazon’s Antitrust Paradox” when she was a Yale law student.

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Amazon’s latest petition to the FTC was first reported Monday by Business Insider.


What should you make of Realme’s three new offerings? We discuss them on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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