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According to corporate registration records, China has purchased minority holdings with special rights in two local divisions of digital giant Alibaba Group Holding Ltd (9988. HK), as Beijing continues its push to tighten its grip over online content.
Beijing has taken “golden shares” in online media and content enterprises for over 5 years. It has also expanded to businesses with large data holdings. These shares, usually 1%, are bought by government-backed entities for board seats and decision-making power.
The first investments made public by the e-commerce company were those made over the past four months in the Alibaba businesses. One of the most visible targets of China’s two-year-long regulatory onslaught on tech companies has been Alibaba.
Funds or businesses with government backing purchase these “golden shares.” These shares typically constitute 1% of a company. In exchange for these shares, the purchasing party receives board seats and/or the ability to reject important corporate decisions.
A state-owned investment vehicle bought 1% of Alibaba’s Youku division in September. This move is to exert control over the streaming video division as per the Chinese government’s efforts to control the internet and media landscape.
The records show that Alibaba appointed Jin Jun, general manager of Zhejiang Media Group, to its board. This move aims to exert control over streaming video and web browser divisions.
In December, CAC-established CIIF unit WangTouSuiCheng purchased 1% of Alibaba subsidiary Guangzhou Lujiao. The subsidiary’s focus is “research and experimentation”. The purchase is an attempt to control the material of Youku and UCWeb.
The Financial Times reported on Friday about the WangTouSuiCheng investment. The investment is intended to help Beijing maintain tighter control over the material of the e-commerce giant’s streaming video division Youku and web browser UCWeb.
An inquiry for comment from Alibaba received no response.
The FT also claimed that talks were in progress for the government to acquire golden shares in the major gaming company Tencent Holdings (0700. HK), which would include a stake in one of the group’s primary subsidiaries. Tencent chose not to respond.
According to Reuters, additional companies with these golden share agreements include Full Truck Alliance Co (YMM.N), the mainland subsidiaries of TikTok owner ByteDance, Kuaishou Technology (1024. HK), and Weibo.
Golden shares can benefit businesses seeking online news and video licenses. Government-backed entities purchase these shares, which constitute 1% of a company. In return, the buyer receives board seats and decision-making power.