Is China's crackdown on big tech firms result of Xi Jinping's move to ascertain dominance?

On May 20, workers at Bytedance, the multi-million dollar tech giant which owns TikTok were faced with a rude awakening as their founder and CEO announced that he will step down from his position in the company. TikTok is one of the most valuable private companies in the world.

Bytedance CEO Zhang Yiming said his reason for stepping down was that he lacks some of the "social skills" needed to be an ideal manager. He was quoted as saying 'I'm not very social, I prefer solitary activities, like browsing online, reading, listening to music, and daydreaming,' he said. 

TikTok worth $250 billion

However, his actions aren't matching his words. Yiming, who started Bytedance in 2012, today owns and operates a number of wildly popular apps which includes TikTok (Douyin in China). Its popularity has landed it a $250 billion valuation, according to reports on Bloomberg. By comparison, Twitter is currently worth $43 billion, Tesla at $52 billion and Amazon at $93 billion.

It's especially surprising since just last month, Bytedance announced that it would not be going public and applying for an initial public offering (IPO) despite predictions that it would soon do so. All this happening in the middle of China's tech crackdown as people began speculating that it was caught in the mix. 

Bytedaance could have filed for IPO

Zhang Yiming, who was expected to file his company for IPO would have become China's richest person if the deal had come through, however it wasn't without significant risk. If Bytedance falls on the government's bad side, he could go down with the company. And sticking around with the firm would have only made him a more viable target.

The success of some Chinese tech companies such as Bytedance, Alibaba and Tencent have put China's government in a tight spot. Companies help China gain global influence, goodwill and increases soft power, but they also invariably make their leaders powerful, influential and difficult to control. 

Xi Jinping scared of tech giants' rising influence in CPC

This perhaps is why Chinese President Xi Jinping called for more aggressive regulation of tech companies to "maintain social stability" but what they mean is status quo. A clear example of this was seen last year when a lot of press reported about the Chinese government stopping Ant Group's IPO, which would have been the world's largest-ever stock listing. Analysts said that was manoeuvred to keep the company and its biggest investor Jack Ma, in life, after the Alibaba founder had openly criticised the Chinese government's foreign policy. He then most famously went underground, and stay disappeared, out of public sight for 3 months.

The recent moves against tech giants are twofold: those running financial services are being reined in, while firms that deal with consumers are also being told to clean up their act.

Since then the government has repeatedly fined Chinese firms and forced them to play by their rules. Since March this year, 2 more major CEOs have resigned and 12 tech giants in the country have been forced to issue "pledges" to abide by Chinese regulations, according to a report in The Straits Times.

It appears that as of now, Zhang Yiming, given the risks of doing business in China, stepping down from the company he founded may be the safest bet, albeit a sour price to pay.