Farewell to the age of savage growth

Search for “antitrust” in the search bar, and the first one that appears is “Microsoft Antitrust Case”, also known as “Microsoft Antitrust Case”, which refers to a series of antitrust cases involving Microsoft since October 1997. America’s Antitrust History Against Internet Giants.

In October 2014, the four-year “3Q” war finally came to an end. The litigation battle between Tencent and Qihoo 360 is also considered to be the first anti-monopoly case in China’s Internet. Since then, there has never been an antitrust case of the same magnitude in China’s Internet.

On December 14, 2020, my country’s Internet anti-monopoly started a new journey.

Recently, the State Administration for Market Regulation acquired the equity of Intime Commercial (Group) Co., Ltd. from Alibaba Investment Co., Ltd., China Literature’s acquisition of the equity of Xinli Media Holdings Co., Ltd., and Shenzhen Fengchao Network Technology Co., Ltd.’s acquisition of the equity of China Post Zhidi Technology Co., Ltd. In addition to the three cases of failing to declare the illegal implementation of the concentration of business operators in accordance with the law, an administrative penalty decision was made in accordance with Articles 48 and 49 of the Anti-Monopoly Law, and an administrative penalty of a fine of 500,000 yuan was imposed everywhere. At present, the three companies have all expressed to the media their attitude to actively rectify in accordance with regulatory requirements.

After decades of development, companies represented by BAT have risen in China’s Internet market. The boundaries of giant companies have become more and more blurred, and the territory covered by investment has become larger and larger. The bloody Internet competition has become a monopoly business. signs.

As the ten-year barbaric growth era of BAT is coming to an end, Internet giants have also come to the crossroads of the end of the traffic dividend and the intersection of strong supervision.

The end of the big M&A wave

Looking back at the development of the Internet in the past ten years, there have been two waves of mergers and acquisitions. One in 2015 and one in 2019. The wave of major mergers and acquisitions had a profound impact on the development of the industry, and even subverted the pattern at that time.

In October 2015, just after the “October” holiday, Meituan and Dianping announced their merger. This time, the law of “the industry leader and the second child merge, and the third one is the most injured” is invalid.

There was a joke back then. Zeng Liang (General Manager of Baidu Nuomi) once told the media that Baidu would invest another 20 billion yuan in Nuomi, vowing to rank second in the group buying industry by the end of the year. With the combined market size and volume, Baidu Nuomi completely lost the opportunity to compete.

In 2018, after the acquisition of Mobike, Meituan once again confronted Ali and Didi head-on. At 23:59 on December 14, the Mobike APP and the Mobike WeChat applet ceased service and operation, and switched to the Meituan APP. So far, there is no Mobike in the shared bicycle market.

Running out of the “Thousand Regiments War”, merging with Dianping, and acquiring Mobike for 3.7 billion yuan, Wang Xing’s “eat better, live better” not only stayed on the blueprint, but now the market value of Meituan has reached 1.68 trillion Hong Kong dollars.

Generally speaking, if a company’s market share reaches 75%, the company has the characteristics of monopolizing the market.

Meituan, which is now approaching 70% of the food delivery market, has been caught in a monopoly storm more than once. Recently, Meituan was killed for its food delivery members, which ran counter to the “big data killing” that was banned by the state in October. Meituan was named and criticized by Xinhua News Agency.

If Wang Xing escaped from countless hard battles and crises, Cheng Wei is no exception.

On Valentine’s Day in 2015, Didi and Kuaidi announced a strategic merger, turning this fight into a “flash marriage”. According to the statistics of Analysys that year, as of December 2014, the cumulative account size of China’s taxi APP reached 170 million. Didi and Kuaidi have a market share of 56.5% and 43.3% respectively, and the two together are as high as 99.8%. This also raised antitrust concerns at the time.

According to the provisions of the Anti-monopoly Law, if the market share of an operator reaches more than half of the market share, it can be presumed to have a dominant market position. Obviously, there is no doubt that Didi and Kuaidi will have a dominant market position after the merger. However, the law does not prohibit an enterprise from having a monopoly position, it prohibits monopolistic behavior, so the key depends on whether the dominant market position is abused in the business process after the merger.

Judging from today’s market, Didi has been testing on the edge of the red line. According to multiple third-party data, Didi currently owns more than 87% of China’s private car market share; more than 99% of the online taxi market share. Of course, the potential of the online car-hailing market has not yet been fully tapped, and it is difficult to say whether Didi’s dominance is stable. However, Didi has been exposed more than once that there is a phenomenon that the driver and passenger side are too high.

Compared with the early merger of Didi and Kuaidi, the acquisition of Ganji by 58.com in 2015 is a typical representative of the strategic transformation of the company to the later stage.

The war between the two classified information websites, which was established in 2005, lasted for ten years. Since 58.com went public in 2013, 58.com has negotiated acquisitions with Ganji almost every year, and integration is not easy for large companies.

A person who has participated in the merger of Tudou Youku has publicly stated that the integration and digestion is accompanied by huge internal friction. Similar to the merger of Tudou Youku, it involves the redistribution of the founding team, the coordination and dismissal of employees of both parties, etc. It took at least three years and it was not completely complete. Digestion.

Ganji.com was acquired in one go, and 58.com also ushered in a new opponent. At that time, Meituan, Dianping, and Ele.me were all eyeing. 58.com also missed the investment of Meituan, a seed player of O2O at the time, which laid the root of its lack of stamina. It was even criticized by users as a “cheater gathering place” due to its non-standardized products.

In September of this year, 58.com announced its privatization, and Yao Jinbo bid farewell to his seven-year trip to the US stock market.

In these two merger waves, there are others like Youku Tudou, Mogujie and Meilishuo, Ctrip’s acquisition of Qunar, Momo’s acquisition of Tantan, Alibaba and NetEase Kaola, etc. At the time, mergers and acquisitions were the way out of endless competition for companies, and mergers were their self-healing process.

It’s just these commercial considerations in the past, and now we also need to consider whether it violates the anti-monopoly law. The merger case of Douyu and Huya has now been investigated, and it should be difficult to see another wave of big mergers and acquisitions after that.

“To BAT” entrepreneurship is difficult to reproduce

In the past, China’s Internet was a somewhat deformed ecological chain. BAT stood at the top of the pyramid, with a large number of companies under $3 billion at the bottom, and there were faults in the middle. After the merger, a group of middle-tier companies emerged, and they are still growing rapidly. They break BAT’s ecological fragmentation, and also make the structure of the entire Internet more stable.

In the second half of the Internet, few To VCs succeeded in starting a business. At this time, BAT is no less attractive to entrepreneurs than the former. But if you are not ready, but want to draw swords, entrepreneurs will inevitably be in the opposite direction.

The industry has summarized a type of entrepreneurial model, namely To BAT entrepreneurship, which is to sell to BAT. Taojiji, known as the next “Pinduoduo”, is the most typical of many To BAT startup failures.

On December 9, 2019, Taojiji announced that the merger and acquisition had failed, and Zhang Zhengping did not wait for the ultimate life-saving straw. Data shows that Taojiji has actually owed more than 1.9 billion yuan, and its existing assets are less than 60 million yuan, which means that from its establishment to its failure, Taojiji survived for 436 days and burned an average of 5.06 million yuan in cash every day. Afterwards, Zhang Zhengping reflected that he spent too much time on financing and his strategy was too aggressive. When the financing promised by the giant changed, the company began to thunder.

At that time, Zhang Zhengping publicly refuted Pinduoduo because of his closeness to Ali. Today, the market value is nearly 200 billion US dollars, and the number of users has surpassed that of JD.com, making it the third largest e-commerce platform in China.

Earlier in the bike-sharing battle, ofo teamed up with Ali, and Mobike teamed with Tencent. The two sides did not back down for this market of 50 million daily orders, and the two giants also provided financial and ammunition support for the two for many times. In the end, Ali chose to support the more potential start-up company Hello, but under the shadow of the giants, these companies have not gone out of their own way. The outcome of ofo and Mobike is well known. Hello today is also facing the siege of Qingju and Meituan travel business. .

Not only in the field of shared bicycles, but also in the new energy vehicle market To BAT entrepreneurial phenomenon is also very obvious. According to Tencent’s article “New Cars Crossing the Line of Life and Death”, four of the “Four Little Dragons of Car-making” have taken funds from Internet giants. Baidu’s appeal for its strategic investment is to develop the “Apollo” plan, which is not conducive to the cooperation between Weimar and other Internet companies.

It turns out that today, the rush to sell to “BAT” has begun to cool. According to statistics from China Renaissance, in the first half of 2019, the total number of M&A transactions in China’s TMT M&A market decreased by 38% compared with the same period in 2018, and the total transaction value decreased by 60% compared with the same period.

The entrepreneurship of To BAT will come to an end, and it should be difficult for such entrepreneurs to do so.

Gone is the “giant buys the entire track”

The difficulty of going public independently, the wave of mergers and acquisitions, the rise of new small giants, and the superposition of various factors, strategic investment has become the most important receiver.

According to public statistics, in 2019, the investment amount of the two companies that Alibaba and Tencent invested in from January to October exceeded 100 billion yuan, accounting for about 18% of the total transaction amount in the primary market during the same period.

In addition, according to “Reaper: Tencent Ali’s 2 Billion Ecosystem”, through investment and mergers and acquisitions of 500 billion to 600 billion yuan in recent years, Tencent and Ali have built an ecosystem with a market value of 10 trillion, which has expanded 10 times in 5 years. .

In contrast, the total market value of listed companies controlled by the local government in Shanghai is 2.8 trillion yuan; the total market value of more than 300 listed companies in Shenzhen is 11 trillion yuan; and the total market value of A shares is 10 trillion US dollars. In other words, the capital energy of Tencent and Ali has even been comparable to that of a first-tier city.

The era of Internet dividends is coming to an end, and capital naturally needs to expand. Tencent is a giant that has long understood that “connection is more important than ownership”.

As early as after the merger of Meituan-Dianping, Tencent invested $1 billion. In the same way, Yao Jinbo once revealed in an interview that Tencent also provided $400 million in cash for the merger of 58 and Ganji, so that Ganji investors could exit as soon as possible.

In 2016, Tencent acquired China Music Group, bought Kugou Music and Kuwo Music in one go, and incubated the national K-song, thus realizing its dominance in music copyright. For emerging startups, this is a difficult problem that cannot be solved by relying on capital and innovation, and they can only choose to hug their legs.

In February 2019, Douban FM announced that it had obtained strategic investment from Tencent Music Entertainment and Zhixin Capital. It is reported that Tencent Music did not pay for this transaction, but sub-licenses a large number of genuine music libraries to Douban FM as content resources in exchange for equity, becoming the second largest institutional shareholder of Douban FM. Copyright has undoubtedly the greatest impact on the development of the music industry.

This year, Tencent led the merger of Douyu and Huya on the one hand, and on the other hand, intends to acquire iQiyi, intending to take action on the two tracks of game live broadcast and long video. In June, Reuters reported that Tencent approached Baidu, which holds 56.2% of iQiyi’s shares and 92.7% of the shareholders’ voting rights, and planned to acquire the shares to become iQiyi’s largest shareholder.

However, since the form of anti-monopoly has gradually become clear in November, the strategy of giant holding does not seem to work. According to Reuters news on November 27, due to price and regulatory concerns, Tencent and Ali suspended the purchase of iQiyi equity, and the capital market was forced to press the pause button for the integration of the long video track expected by the capital market.

As the three newly emerging unicorns, TMD (Toutiao, Meituan, Didi) is fighting fiercely for “community group buying”.

As a vegetable selling business that the Internet did not look down on in the past, it has become a big trend this year. The giants want to continue to play the old routine of “subsidy-monopoly-harvest”. Recently, the competition among big manufacturers has attracted attention. After Tencent invested in the A+ and C+ rounds, JD.com finally made a strategic investment of US$700 million.

Different from e-commerce, long video, etc., community group buying is an important food basket project for people’s livelihood, and oligopoly will lead to bad price wars. Therefore, the People’s Daily commented on this phenomenon, “Don’t just worry about the flow of a few bundles of cabbage and a few pounds of fruit, Internet giants should pursue more technological innovations.”

Under the anti-monopoly attack of the State Administration of Supervision, the other thing that the capital market is most concerned about is the merger of Huya and Douyu.

Some analysts believe that the “big knife” will not really fall on Douyu Huya. The merger theoretically has the possibility of passing the review, but the angle and direction of the specific review remains to be seen. But in the future, the idea of ​​giants buying the entire track will definitely recede.

A butterfly flapping its wings may cause a storm, and the butterfly effect behind the Internet antitrust is about to emerge.

Although the 500,000 antitrust fine is like a “tickling” for Internet giants, the “top penalty” within the scope of the law is enough to sound the alarm for Internet giants.

Whether it is “choose one platform from two” or “big data”, both deviate from the original intention of the Internet itself to open up and reduce information asymmetry, and ultimately affect scientific and technological innovation. This also gave Nobel Prize winner Stiglitz the idea of ​​”escape from the Internet”.

Scholar Fang Xingdong once commented that due to the maturity of anti-monopoly regulations, a group of Internet companies that affect the world will appear in the US technology market almost every five years. On the other hand, in China, it is basically still in the era of the “rule” of the first generation of Internet elites, and there is very little living space for latecomers in various fields.

The end of the old era of Internet monopoly means the beginning of a new era in which a hundred flowers bloom.

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