“Once the privacy law comes into effect in November … China’s regulatory regime for tech will be one of the strictest of any major economy,” said Julian Evans-Pritchard, senior China economist at Capital Economics. “That’s a remarkable shift from just a year or so ago when the opposite was true. “
The news sent Hong Kong’s Hang Seng down 1.8% as the index officially entered a bear market, having plunged 20% from its recent peak.
The impact of Beijing’s steady tightening of the screws on the country’s tech giants is even more apparent when examining individual companies.
Alibaba’s stock in Hong Kong, which shed 2.6% on Friday, has plummeted 32% year-to-date, erasing more than $180 billion in market value.
Shares in New York tell a similar story, having lost 31% this year.
Consensus is growing that more pain is to come. Pritchard notes “legitimate concerns about the underlying motivations behind the abrupt crackdown and whether it forebodes broader efforts to rein in the private sector and shore up the position of the state.”
Meanwhile, the companies caught in the crossfire have made clear they think the campaign by regulators will only intensify.
“The regulators are very focused on identifying and rectifying industry misbehavior and also efficient regulations,” Martin Lau, Tencent’s president, told analysts during a conference call. “They emphasize compliance, social responsibility as well as fair and proper behavior.”
Lau noted that the company would try to steer clear of trouble.
“There will be short-term uncertainties and there are a lot of new regulations that will be coming, but we are pretty confident that we can be compliant,” he said.
But that didn’t stop the company’s shares from losing 9.5% this week. Year-to-date, they’re down 25%.
US regulators take another stab at breaking up Facebook
The latest: Regulators filed an amended complaint in federal court on Thursday alleging the tech giant has monopolized social media and harmed competition, my CNN Business colleague Brian Fung reports.
The new complaint comes nearly two months after a federal judge tossed out the original, arguing that the FTC had not provided sufficient evidence that Facebook holds a monopoly in social media.
The fresh version — which is about 50% longer — will let regulators have another go. It claims that Facebook broke the law by engaging in anticompetitive acquisitions, most notably of Instagram and WhatsApp, and denied third-party apps access to Facebook’s platform.
In a statement, Facebook called the suit “meritless.” Its deadline to respond in court is in early October.
“There was no valid claim that Facebook was a monopolist — and that has not changed,” the company said. “Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful.”
Step back: The stakes are high. The suit marks one of the largest legal challenges ever to Facebook’s social media empire at a time when it faces mounting scrutiny in the United States and abroad. If successful, it could force Facebook to spin off Instagram or WhatsApp.
Leading the charge is FTC Chair Lina Khan, a vocal critic of the tech industry who helped author a groundbreaking congressional report last year that found that Facebook, along with Amazon, Apple and Google, have abused dominant market positions to preserve their power. On Thursday, the FTC announced that Khan would not recuse herself from the Facebook case, despite calls from the company for her to do so.
Investor insight: Investors aren’t panicking. Shares of the company are up 30% so far this year. But increased regulation remains one of the top risks to Facebook’s business.
Tesla is building a humanoid robot
What’s the answer to “boring, repetitive and dangerous” work? Build a humanoid robot, according to Elon Musk.
Musk did not say if it would be sold or for how much. The robot will have a screen positioned where a human face would be to display “useful information.”
Human-like robots have long been a fascination in pop culture. But creating a device that can perform human tasks has proven incredibly difficult. Artificial intelligence has improved rapidly, but remains far behind the general abilities of even a human toddler. Robotics applications have been restricted to basic tasks in simple environments, such as carrying goods in a factory, or autonomously vacuuming a home.
Watch this space: Musk said the robot would have a “profound” impact on the economy. He said physical work would ultimately be a choice, and a universal basic income would be needed.
Think that sounds like the stuff of scary science fiction? Musk disagrees (though I’d love to check in with the company’s roughly 71,000 employees).
“We hope this does not feature in a dystopian sci-fi movie,” he said.
Up next
Coming next week: Will Federal Reserve officials hint at their plans for rolling back stimulus at the annual Jackson Hole summit?
