here in Guangzhou, China. And today's episode is  going to be focusing on the technology regulatory  

crackdown here in China, why it's happening now,  what's really going on, what happens next. And  

really what it means for Chinese tech companies'  ambitions, particularly as they look to go global.  

And as China and the US battle it out for tech  supremacy on the global stage, all that will be  

revealed in my in depth conversation with a very  special guest, who is an internet entrepreneur  

as well as a former legislator in Hong Kong. But  before we get to that conversation, I want to set  

the context here because it's a story that's moved  extremely quickly. If you've not been following  

it closely. We've seen a raft of regulation for  the technology and internet sector here in China,  

as well as other parts of the private  sector as well. And it all appeared to  

start in November 2020 when Ant Group, the  financial technology or FinTech company,  

founded by billionaire jack Ma, was going to go  public in Hong Kong and Shanghai and what would  

have been the world's largest IPO. Just a couple  days before that was scheduled to be listed,  

the IPO was pulled. And the company cited changes  in the financial technology regulatory environment  

for a reason that regulators end up pulling this  IPO. Now, I remember flying to Shanghai a couple  

of days before this IPO. We were set to cover it,  put my bags down in the hotel one night and boom,  

this story just blew up at this point. And we  were covering it furiously writing an article.  

The next day I was on the streets of Shanghai  reporting live on CNBC TV to discuss the story  

and what had taken place at this point. But  the speed of what what happened really just  

underscores I think the speed of change happening  in what is a new normal now for the tech sector  

here in China. Now at the time, there was a lot  to talk about whether Jack Ma's comments a few  

days previously, which were perceived as negative  towards the regulators had a factor in that there  

was certainly more behind it at that point. But it  did kickstart a number of other regulatory actions  

and movements as well. There were new rules  that came out in terms of antitrust specifically  

for the platform economy, which refers to these  technology companies operating platforms such as  

e commerce sites, or food delivery or social  media as well. There were new rules on unfair  

competition on the internet, Alibaba was hit  with a $2.8 billion fine in an antitrust probe.  

Meituan the food delivery giant is currently under  investigation as well in an anti monopoly probe,  

as well. And the government's introduced new rules  around data privacy and data protection. And now  

the other high profile incident to highlight here  is Didi, the ride hailing giant, which went public  

over in the US. Days later, the regulators  open the cyber security probe into the company.  

And we'll certainly get into more of that and  why that happened. But the question really is  

why now, why this regulatory movement now and  what next? What is the endgame? And to discuss  

that with me today? I've got Charles Mok, an  internet entrepreneur as well as a former Hong  

Kong legislator. He is the founder of Tech for  Good Asia, an advocacy group promoting the fair,  

open and safe use of technology, Charles, good to  see you. Thanks so much for joining the podcast.

Good to see you.

So let's kick off this conversation because,  

you know, there's various regulators who are  involved right now in the, the tech regulation  

here in China. You know, what's changed at  the moment in terms of the thinking from  

Beijing? Why now? Are we seeing this big  regulation of the country's tech sector?

Yeah, I guess it all started. For most people  looking at what's been happening, most people  

would probably think that the the crackdown  started when, you know, when the Ant Financial  

tried to IPO in Hong Kong last November. Now,  looking back, I think by now, I mean, hindsight  

is always perfect. So looking back, I would  say that, we are able to see that actually, a  

lot of the trends that the Chinese government had  been planning for this sort of actions to happen,  

actually have been happening for quite a few  years, in particular, some of the legal changes  

that they have put in place, including the last  couple of years, strengthening some of the anti  

trust laws inside of China. And more recently, of  course, the data security and the cyber security  

laws. These are actually I would say, looking  back in hindsight, things that the government has  

been preparing for this wave of action. Now, of  course, the recent escalation of the effort or the  

ferocity of these kinds of actions, may really  take most of the people in the market by  

surprise, to a great extent. And I think part of  the reason is also because when we think about  

investors, or even many of those people, or groups  that are actually investing directly in these  

companies that are involved, you know, companies  that are trying to get IPOs, and financials,  

Didi and other spinoff from Tencent and so on.  You look at those people that are in the market,  

they actually probably within the last couple of  years, were thinking that things are going to get  

tougher, and they wanted to get on the last train.  So they were trying to rush themselves in the door  

or out the door, which whichever way you look at  it, they want to get the last chance to let's say,  

do a huge IPO before the crackdown happens. And  probably that's also what made the authorities  

more agitated. What made them more on  edge. And, and probably because of that the  

sort of action, the level of action that has  been taken recently had been more escalated.

Has there been any kind of shift in  terms of the mentality in terms of  

the thinking of the Chinese Communist Party  and the broader government agencies towards  

the tech sector Do you think? Or the  private sector for that matter, as well?

Yeah, I think it's actually not just the tech  sector sector is also the private sector, as a  

whole, particularly those sectors that are prone  to be controlled by a smaller number of players  

that are becoming very affluent,  very wealthy, has a lot of power.

Either within those companies, or actually, even  between companies, you know, they work together  

in certain ways. So the government is probably  concerned about those power be invested  

increasingly in the private sector. We've been  hearing or talking in the last several years  

of the central government and the party  thinking that they want to move a bit back  

away from the proliferation of the private sector  toward more control by state owned either either  

directly or, you know, not necessarily the same  kind of state owned enterprises have decades ago,  

but more involvement and control by the central  authorities. That's certainly a trend. So in  

a sense, I believe they are definitely trying to  instill and develop a new economic order In China,  

that is very much reversing  the kind of liberalisation  

and economic reform sort of almost free  for all for the private sector to flourish.  

That kind of opening up, I do believe that this  is, it's clear that the whole thinking is changed.

And when you say new economic order, I mean,  

what would you think? Or what can you discern  that are some of the features of that?

Well, if you look at it from the regulatory  aspect, first of all, is pretty clear that  

the government is looking at number one, sectors  that has to do a lot with you know, as I said,  

you know, sectors that are easily controlled  by a small number of players to trade practices  

across sector within the sector, that that  allowed them to, to develop the sort of anti  

monopoly or monopolistic type of trade practices,  they are very concerned about that. And of course,  

they will say that the reason is because they want  to protect consumer interests. And there is a good  

degree of truth in that as well, not to make a  course also the government wants more control.  

The second very important trend is  obviously the concern about data.

And that, why we seem to see a lot of the focus  being put on tech companies, because they are  

the companies whether they are in, okay, apps  or online games, or transportations like Didi  

or financial services, we are talking  about these companies putting all these  

services more and more online, and  then they collect a lot of data.  

Now, that means that well, of course,  when we look at Didi for example,  

well, it's clear that the government was the  Chinese government was concerned if the Didi go  

IPO in the foreign country, and then they might be  successful susceptible to those foreign countries,  

especially the United States, trying  to get these data from these companies,  

because they get listed on in the US. But  actually, even within the country domestically,  

the government is probably also concerned about  the power of these company collecting and having  

a monopoly on all these data. And then finally,  of course, also about capital, the government's  

in the past, I think they weren't as  concerned about these companies trying to  

get IPO and get capital investment from foreign  entities and investors and so on. In the past,  

I believe even the government believed that it was  a good thing, because you know, every government  

should want more foreign direct investment, or  even foreign IPOs. But I think that mentality  

has changed. Right now, the government is more  concerned about what they call disorderly capital  

expansion, which has to do with these companies  either, you know, going to getting foreign  

investment, and, and then the central government  may be worried that this might be this might allow  

foreign interest of or even governments to  have to have too much control within what's  

going on within China. And that's becoming  more and more sensitive for the government.

So Charles there's a lot to unpack, he had some of  the comments you've made in the past few minutes.  

So I do want to just take it back a little bit.  And we'll delve more into that data point. And  

a few of these other points. Firstly, you know,  the power of the tech companies is something you  

mentioned. And one of the interesting things was,  of course, before the pulling of the ant group IPO  

in November, you know, jack Ma, did make that that  notorious speech now, in which he was perceived  

to be pretty negative towards the regulators  in China. And there was a lot of talk about  

whether that was the catalyst for the regulatory  action, but more broadly, whether the action  

against ant group and subsequent actions against  Alibaba in terms of that huge antitrust, fine,  

we're really about making an example of some of  these tech entrepreneurs who have potentially  

created alternative power centers to the CCP, and,  you know, are posing a potential challenge to the  

power there. I mean, how much do you buy into that  narrative? You know, how true is that narrative?

I think there's some truth to that. It probably  you mentioned about Jack Ma's speech late last  

year, I believe that probably was the, pretty  much the last straw on the camel's back,  

that really forced, prompted the government into,  

you know, finally taking very drastic or  serious action or stopping the IPO and so on.

But, as I said, I don't believe that it was the  only reason. The government over the last several  

years probably had been very concerned  about the power that is developed within  

some of these individuals, like you mentioned  Jack Ma, and others, but I don't think it's just  

a few, you know, figures like Jack Ma, or pony  Ma, or people like that is actually the whole,  

interconnected circle of interest among these  people, I think when we look back at some of the  

reports coming out of the that IPO, and some of  the pre IPO activities that was reported, later  

on, the kind of allocation of pre IPO, stocks,  and so on, to different individuals, or groups,  

and so on, you could see that there was a huge  amount of these kind of relationships in China,  

you know, it's not just, you know, Ant  Financial, when they went, if they did go IPO,  

it doesn't mean that there was only a few  person that are expected in the companies and  

Mr. Ma himself, making a lot of money. It's  actually a whole group of people as well.  

And I think that's the kind of thing that  the Chinese government is concerned about,  

not just any particular individual, but the sort  of sphere of influences that are being developed  

among these rich individuals and companies  that actually also, in many cases,  

have relationships with investors outside of  the country, as well. So they are concerned.

Yeah, and I guess that fits into this narrative  from the Chinese government around creating a  

common prosperity, right. And at the same  time, you've got a lot of these sort of,  

you know, rich tech entrepreneurs, making  a lot of money. But at the same time,  

there's a lot of disenchantment with, for example,  the working culture in the technology, sector,  

996, etc. So I guess some of this action  also tries to fit into that narrative of,  

to some extent, the Chinese government  looking like it's looking after the people.

So actually, I think there were a lot of good  reasons why the government had to do what it did.  

Because there were indeed, a lot of very seriously  deficient or unhealthy culture, among these  

companies that are developed in the kind of  work ethics that they miss demanded from their  

employees, long work hours, and so on. People  actually working themselves to death in a  

couple of instances. Very recently, of course,  the last couple of weeks, some of these sexual  

harassment cases that came out, which actually  revealed also that there's huge amount of sexual  

harassment types of issues, or culture within  these big companies that they have in the past  

been trying to overlook. So it probably fell  right into the, the conveniently fell into