Beijing intensifies its crackdown on China’s Princes of Technology

"Silk and bamboo burn, and the emperor's achievements are nothing."

Thus begins a 1,100 year-old Tang Dynasty poem that has, believe it or not, lit a political fire in the Chinese technology world. The emperor pilloried in the ancient verse is Qin Shi Huang, who formed the first unified Chinese empire in 221 B.C. and infamously ordered "the burning of the books" —allegedly subversive texts produced from silk and bamboo, the writing materials of the day.

When the tech mogul Wang Xing posted this poem on an obscure Chinese internet site, his e-commerce platform, Meituan, lost $26 billion in market value over two days, evaporating several billion dollars of his own wealth, on the belief that he too was making a subversive statement.

Some even thought Wang might be aiming veiled criticism at the current leader-for-life, President Xi Jinping, which would be an incredibly dangerous move.

Wang quickly denied any political intent. Still, the episode underscores how, in China, skittish investors have come to fear that an all-out campaign targeting Wang and other billionaire tech entrepreneurs has gone well beyond its ostensible goal of punishing monopoly abuses.

Indeed, the crackdown has all the hallmarks of a historic Chinese power struggle.

Regulators launched their assault after Jack Ma, the Alibaba co-founder, publicly lashed out at Xi's signature initiative to control financial risk. As punishment, they aborted the $35 billion listing of Ma's fintech startup, Ant Financial, and fined Alibaba $2.8 billion after an anti-monopoly investigation.

Given that history, it seemed quite possible that Wang's poem was a similar protest: more subtle, though every bit as risky.

In Mao's day, this was how politics played out. Warring factions attacked each other using literary allusion. For instance, a raging debate over the play, "Hai Rui Dismissed From Office," a drama about an honest minister imprisoned for criticizing the emperor, heralded the start of Mao's Cultural Revolution in 1966.

Today's battle is over China's vast troves of data. Just as the titanic struggles of the past took place within a small circle of elites, this one too is highly personal. The winner-take-all economics of the tech sector has concentrated ownership of consumer information in the hands of a coterie of fabulously wealthy entrepreneurs in e-commerce and fintech. "There's a nervousness about who's in control," said Duncan Clark, the author of "Alibaba: The House that Jack Built."

China's Communist Party claims an absolute monopoly on power. But in reality, Clark noted, Ma, Wang and their peers arguably have more granular financial insights (and understanding of market trends) than regulators in Beijing. "That's how you run the economy," Clark said.

It's also how you keep tabs on the population. While the surveillance state has a formidable capacity to track where citizens travel, who they meet and what they say, it doesn't have nearly the same digital tools to monitor their spending habits and therefore predict the economic future.

How will this struggle play out? On the one hand, the men who run China—a lot of them engineers by training—understand they need the tech titans for their commercial dynamism. They also know that the private sector is much better at collecting and organizing the massive data flows that feed machine learning, the intelligence that will drive 21st century economies.

Yet they fear that internet plutocrats have grown powerful enough to vie for control with the Party, at least in the economic sphere.

There's every likelihood that this battle will rumble on inconclusively for the foreseeable future. Meanwhile, international investors had better beware; China's tech sector is now operating in a different realm from its U.S. counterpart. Superficially, the two are the mirror image of each other: Alibaba is Amazon, Renren is Facebook, Sina Weibo is Twitter.

But the comparisons stop there. As my colleague Shuli Ren writes in Bloomberg Opinion, "irreverence has worked out very well for Elon Musk," who can disparage the Securities and Exchange Commission on Twitter all he likes "yet come off as cool."

Among Chinese billionaires "such talk can be expensive." So even if Wang wasn't assailing Xi with his cryptic poem, it may not matter. The Party, it seems, is coming after him.