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Simon Huang · · 8 min readAsian tech feels the heat as regulators bare teeth
Samreen Ahmad co-reported this story.
Shopee. TikTok. Paytm.
These are some tech firms that have recently been caught in the crosshairs of Asian regulators, for reasons including countries prioritizing political considerations over economic ones, the influence of developments in the West, and frustration that fines alone aren’t enough to deter bad behavior.
At best, investigations by regulators risk being a small annoyance. At worst, they can cut off revenue sources and affect how businesses operate.
TikTok Shop, the short-video app’s ecommerce arm, was forced to close its operations in Indonesia last October. It eventually made a comeback by merging with local ecommerce platform Tokopedia, part of the Indonesia Stock Exchange-listed GoTo Group.
Photo credit: Creativa Images / Shutterstock
Any schadenfreude that Shopee may have had over the fate of its competitor is surely tempered by the fact that it, too, is now facing regulatory scrutiny in Indonesia. The firm is being probed over its alleged monopolistic practices of directing users to affiliated shipping companies for deliveries.
See also: What Shopee’s breakup with Ninja Van, QuadX in the Philippines means for 3PL firms
These incidents may seem like a series of one-off, idiosyncratic decisions across disparate areas. But they also suggest that tech companies in Asia should prepare to face greater levels of regulatory scrutiny.
It’s raining regulation
Concerns over greater regulation of tech companies in Asia aren’t new.
In 2020, as the European Union (EU) drew up a “hit list” of 20 major internet companies to be subject to more stringent rules and the US Congress accused tech giants of abusing their market power, Southeast Asia also tightened its regulatory screws.
Industry experts Tech in Asia spoke with at the time had warned that Big Tech could expect enhanced oversight from Southeast Asian regulators in the areas of data, social media content, tax, and merger control.
A storm broke shortly after. In October 2020, Alibaba founder Jack Ma criticized China’s financial and regulatory system for stifling regulation.
He also called out traditional banks’ “pawn shop” mentality – making loans that are backed by some form of collateral – saying that it would not be able to support the country’s growing credit demands. A month later, Ant Group’s IPO was suspended.
Politics over economics
Western influence, with limits
From fines to stopping revenue lines
Double-edged sword
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In China, domestic and external challenges have reordered national priorities, with politics trumping the economy.
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