SINGAPORE—China has notified some companies of new rules that require the country’s biggest internet firms to seek approval for investment deals, a mechanism that is likely to curb domestic technology giants from growing even bigger through acquisitions, according to people familiar with the issue.
The country’s top internet regulator, the Cyberspace Administration of China, recently established a new mechanism that requires internet companies to obtain formal approval for investment deals if they have 100 million users or more or have posted revenue in the previous year of at least 10 billion yuan, equivalent to $1.57 billion, the people said.
The regulator notified some companies this week, some of the people said.
The new requirements come after a year of clamp downs on the country’s internet sector, and could lead to increased regulatory scrutiny into such deals and even block internet companies from making certain investments, the people said.
The new rules would affect China’s biggest technology companies, including Tencent Holdings Ltd. , Alibaba Group Holding Ltd. and ByteDance Ltd., each of whose products boast more than one billion active users.
The Cyberspace Administration of China, Tencent and Alibaba didn’t respond to requests for comment.
A spokesperson for Beijing-based ByteDance, which operates the hit short-video mobile platform TikTok, said Wednesday that the company is dismantling the strategic investment team, which serves as its corporate venture-capital arm.
People familiar with the matter said the decision was made in response to the new rules, and that dozens of employees within the team were being either transferred to other positions or laid off.
Asked whether the decision came in response to the new rules, the spokesperson said it was made earlier this year to “strengthen the coordination between strategic research and the business.”
—Raffaele Huang contributed to this article.
Write to Keith Zhai at [email protected]
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