The rise of concentrated market power in the digital economy has emerged as a defining challenge of the 21st century, affecting both state-managed and capitalist economies. While much attention has been devoted to the regulatory experiments of the European Union and the apparent inertia of U.S. regulators, China’s new competition regime for the digital economy has remained underexplored. This paper examines China’s new competition regime, introduced since the late 2010s, that is characterized by a wave of regulatory changes (e.g., new Anti-Monopoly Guidelines for Platform Economies), a bolstered Antitrust Bureau of the State Administration for Market Regulation (SAMR), and a series of record-breaking fines issued against its domestic internet platforms. Since the late 2010s, China’s government has squarely confronted the problems of its own ‘Big Tech’ with a new competition regime for digital markets. However, given unreliable official figures, a new methodology is needed to assess competition in China’s digital economy. This article introduces a market capitalization approach that builds on the informativeness of China’s financial markets. We use Bloomberg financial data of 1142 publicly listed firms for the period 2019 to 2022 to quantitatively examine the impact of China’s new digital competition regime. We find a causal link between the new governance approach and a reduction of market concentration and aggregate growth in the primary markets of China’s three most dominant digital platforms – Baidu, Alibaba and Tencent (BATs). Other empirical findings include a negative correlation between market concentration and the openness of digital markets, a non-relationship between market concentration and profits, and the inability of profit and revenue-based metrics to capture market power effectively in China’s digital economy. Finally, we discuss the relevance of these insights for Western regulatory strategies, particularly as the EU and China emerge as global frontrunners in the field of digital competition regulation.
