China's Tech Crackdown—and the Making of a New Model

Hey y'all, it's Austin. Perhaps China's recent crackdown on its tech scene was inevitable. Yet now that the government has brought once-freewheeling industry behemoths such as Alibaba and DiDi to heel, C-suite leaders and venture capitalists around the world are trying to figure out how the country's version of Silicon Valley will change after years of trying to emulate the U.S.

As my colleagues and I reveal in Bloomberg Businessweek's new cover story, insiders deeply familiar with the market believe China is not out to destroy its Big Tech players, but to rein in the largest companies for alleged monopolistic abuses at speeds American regulators simply cannot achieve. As one legal expert noted, the Chinese government's antitrust case against Alibaba took mere months, whereas in the U.S. similar actions against the likes of Facebook or Google would inevitably take years. Such swift intervention is rapidly reshaping China's tech model, potentially giving startups more room to compete against their larger adversaries (rather than being gobbled up or stifled by them) while forcing dominant companies to act more in line with national priorities over corporate interests.

Of course, the stakes of this new approach are colossal. China's tech giants caught up with or beat their U.S. counterparts partly because the government took a more laissez-faire attitude to facilitate unfettered growth. But the more China pivots away from Silicon Valley-style excesses, the more they risk crippling their biggest engines of innovation, curtailing access to Western capital and retreating on the global technology stage. Click here to read our story. —Austin Carr