China Turns Up Pressure on Its Tech Giants

Representatives from food-delivery app operator Meituan, 3690 -0.79% e-commerce companies JD.com Inc. and Pinduoduo Inc. PDD -2.97% and ride-hailing platform Didi Chuxing Technology Co. also attended the meeting.

The session marks Beijing’s latest salvo as it increases pressure on China’s major consumer internet companies. Many of them enjoyed relatively unchecked growth over the past decade as China sought to develop its own global technology champions. But as the companies have grown powerful, armed with massive consumer data, authorities are increasing scrutiny to keep them in check.

In early November, China suspended Ant Group Co.’s blockbuster initial public offering after Jack Ma, the financial technology giant’s billionaire co-founder, angered Beijing by criticizing President Xi Jinping’s signature campaign to control financial risks.

Shortly after, authorities unveiled guidelines to tighten oversight of a burgeoning live-streaming sector. The government subsequently drafted new antitrust rules for technology companies to protect consumer interests and prevent monopolistic behavior. China’s leaders also have publicly called for strengthened antitrust efforts.

Community group buying involves a group leader appointed by e-commerce platforms, typically a resident in an apartment complex or a grocery store owner. These leaders are incentivized to create large social-media chat groups with as many as hundreds of participants, usually people living nearby. Links are frequently shared within the chat group enabling members to buy products at cheaper prices.

This bulk-buying model shot up in popularity after China locked down cities as the coronavirus hit in the first quarter of the year. Many residents couldn’t leave home and relied on such chat groups and e-commerce sites to buy groceries.

Such purchasing also offers low prices. On one group-buying platform Tuesday, 500 grams, or about 1.1 pounds, of oranges were selling for 1.4 yuan, or about 21 cents, and 30 eggs for 10.9 yuan. In its statement Tuesday, the regulator banned companies from pricing products below cost for group buying to squeeze out competitors.

Last week, Chinese regulators fined both Alibaba and Tencent 500,000 yuan, equivalent to about $76,400, for failing to properly report past acquisitions. While the fines were relatively small, observers said regulators were enforcing these rules on foreign-listed Chinese companies for the first time, indicating a new determination to strengthen control over tech firms listed overseas—like Alibaba.

During the Central Economic Work Conference last week attended by Mr. Xi, policy makers agreed to give priority next year to antitrust efforts and regulating data collection and use, as well as consumer protection.

—Raffaele Huang contributed to this article.

Write to Liza Lin at [email protected]