Golden shares let China's government take control of big tech

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By Matthew Griffin Connected Society 7th April 2023

WHY THIS MATTERS IN BRIEF

China and many others think big tech companies are far too influential and powerful, so by taking Golden Shares in them China’s government can now control them and veto decisions.

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In their attempt to rein in companies that are becoming too powerful, or which don’t toe the government line, the Chinese government has announced that it’s to take “Golden Shares” in two of its biggest tech companies, Alibaba and Tencent, as Beijing extends its influence on the country’s star tech firms and its most powerful and wealthy business people.

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Beijing’s move marks a shift away from imposing hefty fines and sanctions in its two-year tech crackdown, which was launched after Alibaba founder, Jack Ma, criticised regulators.

The crackdown has proved tumultuous for Chinese tech firms, with billions wiped off their value, and moves including blocking the flotation of Ma’s financial services firm, Ant Group, which would have been the world’s biggest IPO.

Earlier this week the fintech company announced that Ma, once China’s richest man but now living in self-imposed exile in Japan, would cede control of the company. However, the government’s approach has weakened foreign investment and the competitiveness of the Chinese tech market, resulting in a softening and change of tactical approach to keeping its big tech in check.

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Beijing recently took a small equity stake in the Twitter-like Weibo and in ByteDance, the privately owned parent of TikTok, which is known as Douyin in China, as a means for the state to become more directly involved in business operations.

The move to take stakes in the local operations of Alibaba and Tencent, which usually amount to about 1%, have been dubbed “golden shares” as they come with special rights over business decisions.

Within China the stakes are known as “special management shares” and have been used since 2015 by the state to exert influence.

On 4 January, a division under the state investment fund established by the regulator Cyberspace Administration of China acquired 1% of an Alibaba subsidiary, Guangzhou Lujiao Information Technology. Alibaba owns social media entities including Youku, dubbed China’s YouTube, and the web browser UCWeb.

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The state is in the process of taking a similar approach with Tencent – which operates China’s most popular streaming service, Tencent Video, and an array of other offerings including the WhatsApp-like WeChat, music streaming and gaming – according to the Financial Times.

The government also has a stake in a local entity owned by Kuaishou, a smaller rival to ByteDance’s Douyin, through the state-owned Beijing Radio and Television Station.

The streaming service Bilibili, the Nasdaq-listed business that began as subculture destination for anime, gaming and comic fans, is also pushing for a state entity in Shanghai to take shares in one of its subsidiaries, according to the FT.

Matthew Griffin / About Author

Matthew Griffin, multi-award winning Futurist and named Futurist of the Year 2024, has been described as a "Walking encyclopaedia of the future" by NASA and a futurist polymath. One of the world's most renowned futurists and strategic foresight experts Matthew is the 15 times author of the blockbuster "Codex of the Future" series, and is the Founder and Futurist in Chief of the 311 Institute, a global Futures and Deep Futures advisory firm working across the next 50 years, XPotential University, the world's first free futures and foresight university, and the World Futures Forum which works with the United Nations to solve the worlds greatest challenges. Matthew is an in demand international keynote, acclaimed university lecturer and mentor, and host of the hit Fanatical Futurist podcast.

A rare talent in his past Matthew helped build and run several multi-billion dollar business units for Atos, Dell-EMC, and IBM, and his ability to identify, track, and explain the impacts of hundreds of emerging technologies and trends on global business, culture, and society has earned him a powerful reputation and a roster of clients that include royal households, world leaders, G7, G20, and G77+ governments, and many of the world's most respected brands including ABB, Accenture, Adidas, AON, ARM, BCG, Centrica, Citi Group, Coca Cola, Dentons, Deloitte, Disney, Dow, EY, KPMG, Lego, Legal & General, LinkedIn, Microsoft, PepsiCo, Qualcomm, RWE, Samsung, T-Mobile, UBS, VISA, and many others. He was also the only futurist invited to talk at the UN COP28 held in Dubai alongside world leaders.

Regularly featured in the global media including the AP, BBC, Bloomberg, CNBC, Discovery, Forbes, Khaleej Times, Telegraph, TIME, ViacomCBS, WIRED, and the WSJ, Matthews mission is to help organisations create a fair and sustainable future whose benefits are shared by everyone irrespective of their ability, background, or circumstances.