China Doubles Down on Regulating Tech Firms While Stocks Plunge

China is taking further steps to manage its internet companies. China is acquiring equity stakes, filling board seats and sending regulators to review content more frequently. Authorities have their sights on ByteDance Ltd., the parent company of popular video streaming app TikTok. Government officials went on to acquire 1% of shares in ByteDance Ltd.

The State Administration for Market Regulation (SAMR) is spearheading the crackdown and antitrust campaign against big tech. On Tuesday, the new rules forbid businesses from faking statistics about their sales, product orders and customer reviews. This includes banning fake customer reviews to hurt the competition.

SAMR investigation of Alibaba (BABA) this year led to the company incurring a record $2.8 billion fine. Chinese tech stocks are crashing in response to the news. Tencent (TCEHY) is falling 4%, (JD) lost 5.2%, and Meituan shot down 3.5%.

The Chinese government is citing a need to protect national security interests and its people. Chinese regulators continue to blame the private sector for creating social, economic, and political problems that might potentially destabilize society. This potential threat of destabilization can affect the Chinese communist party’s grip on power.