China’s antitrust probe might create stage taking part in area for smaller tech corporations: Pantheon’s Jie Gong
The investment world is not overly concerned about the recent efforts Beijing has made to tighten control over monopoly practices in China’s big-tech giants. According to a partner of Pantheon Ventures, the intensified antitrust review of the country is intended to create “a level playing field” for smaller competitors.
“From an investor’s perspective, the regulation discourages internet giants from using certain aggressive tactics to stifle competition, which helps level the playing field for smaller competitors so that they can emerge and thrive“Jie Gong, a Hong Kong-based partner with UK investment firm Pantheon, said in an interview with DealStreetAsia.
“In this way, sectors are no longer controlled by some dominant actors at the expense of young competitors.”
With total assets under management (AUM) of US $ 65.9 billion by the end of 2020, Pantheon will invest in private equity, infrastructure and real estate, as well as in private debt. The company employs around 360 people, over 100 of whom are investment professionals, in eight offices in New York, San Francisco, London, Hong Kong, Seoul, Bogotá, Tokyo and Dublin.
An early sign of Beijing’s determination to contain its internet giants surfaced in November 2020 when Alibaba’s fintech spin-off Ant Group derailed its $ 37 billion IPO from regulators days before it was released.
In the country’s latest antitrust development, in early April the regulator imposed a record fine of 18.2 billion yuan ($ 2.8 billion) on e-commerce giant Alibaba – equivalent to 4% of the company’s total revenue for the year 2019 – because the company forced traders to sell exclusively on its platform, a practice known as “picking one out of two”.
Meituan, the largest on-demand delivery service provider in China, is also in the spotlight after the regulator announced on April 26 that it was launching another anti-monopoly investigation, while Reuters reported two days later that Tencent was the next target would be.
“Personally, I don’t see the recently announced antitrust settlement and investigation into the practices of tech giants as particularly unexpected or alarming. Technology giants have exerted a great deal of influence on themselves in many industries.Said Gong.
“However, the current investigation into a number of internet giants related to the regulation creates some uncertainty about how the regulation will be interpreted and applied. Immediate completion of the probes with clear conclusions will remove this overhang and provide clarity, ”she added.
Jie Gong is a partner in Patheon’s Asia Investment Team and Vice Chairman of the Hong Kong Venture Capital and Private Equity Association (HKVCA). Prior to Patheon Ventures, she was Head of Asia at the Private Equity Fund of Funds group of Morgan Stanley Alternative Investment Partners.
Edited excerpts from the interview: –