Bloomberg
China expands internet crackdown with Meituan Monopoly probe
(Bloomberg) – The Chinese government has extended its antitrust crackdown beyond Jack Ma’s tech empire, launching an investigation into the alleged monopoly practices of food delivery giant Meituan. choose one of the two, ”using the same language in a survey of Ma’s Alibaba Group Holding Ltd. which resulted in a fine of $ 2.8 billion. China’s third-largest internet company recovered from early losses to 3.1 percent on Tuesday after analysts at Nomura estimated Meituan may have to shell out more than 4.6 billion yuan ($ 709 million) on the basis of Alibaba’s punishment. Holding Ltd. and Ant Group Co., and threatens to dampen the ambitions of founder Wang Xing, one of China’s most aggressive entrepreneurs. The government has become increasingly concerned about the growing influence of titans like Alibaba, Tencent Holdings Ltd. and Meituan on all aspects of Chinese life as well as the vast amounts of data they have accumulated while providing services. like online shopping, chatting and commuting. The antitrust campaign has gathered pace in recent weeks, as regulators imposed a record fine on Alibaba, ordered its subsidiary Ant to review its operations, and ordered 34 of its biggest tech companies – including Meituan – to rectify any anti-competitive business practices. in a month. Following the meeting with SAMR, the Beijing-based company pledged to comply with antitrust laws, saying it would keep the market orderly and not force traders to ‘choose one of the two’ – forcing them to choose between Meituan or a rival. – by unreasonable methods. Meituan said in a statement on Monday that he would actively cooperate with the investigation and step up efforts to comply with the regulations. helped differentiate its restaurant supplies from those of its competitors, ”Nomura analysts Jialong Shi and Thomas Shen wrote in a research note. “Meituan’s strong market position and customer loyalty have allowed it to go beyond that.” What Bloomberg Intelligence Says: Meituan is unlikely to face tougher penalties than Alibaba’s recent $ 2.8 billion fine after being slapped with a monopoly probe, a sign that declining regulations ‘expands on the country’s technological behemoths. The interim period could be baffling for its investors, but we believe any penalty Meituan may pay will be commensurate with its smaller operational scale .– Vey-Sern Ling and Tiffany Tam, analystsClick here for researchIt remains uncertain whether regulators will target Other aspects The company, founded by billionaire Wang, 42, has long been criticized by rivals and traders for alleged excesses such as forced exclusivity deals. The company – which competes with Alibaba’s Ele.me for food delivery – had already been found guilty of unfair competition in at least two court cases this year and ordered to pay compensation, local media reported. The company had also dismissed allegations that it charged expensive commissions to restaurants during the Covid-19 outbreak last year. Beside Ele.me, Meituan also faced an online backlash after that several delivery people were killed or injured as they tried to meet strict deadlines. He was one of a handful of operators fined by the antitrust watchdog in March for providing inappropriate subsidies to grow in the hot community e-commerce arena. our initial thought, ”Nomura analysts wrote. Ahead of the investigation, Meituan said he would raise $ 10 billion in another record-breaking share sale by a Hong Kong-listed company as well as through a convertible bond offering. The company had said it would use the funds to boost investment in new technology such as standalone delivery as well as general purpose.Read more: Meituan CEO Who Beat Jack Ma gets $ 10 billion for the next fight Under antitrust laws, Meituan could face a penalty of up to 10% of his earnings if he is found to have violated the regulations. Its 2020 revenue was around 114.8 billion yuan ($ 17.7 billion). In contrast, rival Alibaba was fined $ 2.8 billion, or roughly 4% of its national revenue in 2019. Wang, a coding guru whose methodical obsession with data and algorithms has grown. proved key to humiliating Alibaba’s rival restaurant service, Ele.me, has openly telegraphed its ambitions. In an interview with local media in 2017, he said Meituan could join Alibaba and Tencent as the third member of a Chinese internet triumvirate in five to ten years, due to the value it creates in food, travel and other services. in a lengthy article online, how he’ll channel the raised capital into research into autonomous drones and delivery systems – which analysts expect to fuel Meituan’s foray into the hot community commerce arena, where buyers in a local neighborhood get wholesale discounts. Meituan was expected to lead a pitched subsidy and sweetener battle with Alibaba, JD.com Inc. and Pinduoduo Inc. for food and product sourcing. Meituan’s shares nearly tripled in 2020 , making it one of the top performing Chinese tech stocks. It fell about 31% from a February record, in part as China’s antitrust campaign gained momentum and after the company signaled it would suffer more losses from its investments. in new businesses like online grocery shopping. Its dollar bond spreads widened on Monday after the watchdog was announced. (Updates with share action and analyst commentary in second paragraph) For more articles like this please visit us at bloomberg.com 2021 Bloomberg LP
