How to Rein In Startups?

Incumbents’ toolkit

Insta360 (影石) founder Liu Jingkang reportedly told state broadcaster CCTV’s Dialogue program that when his firm moved from panoramic cameras into drones it ran head‑first into a system of commercial blockades — exclusive mall deals that removed his signage, suppliers warned to stop shipping to the startup, and sudden last‑minute vendor switches that nearly delayed product launches. Those allegations, reported across Chinese business outlets, crystallize a broader question: when dominant players can coordinate distribution, supply and talent, is the market still open?

Multiple levers, one effect

From the outside each tactic looks commercially plausible. Channel exclusives, supply‑chain “two‑choice” demands, generalized non‑compete clauses, strategic investments and scare‑priced product wars each have a defensible rationale: protect investments, secure quality, deter free‑riders. But it has been reported that suppliers have been told explicitly to avoid working with rivals — “we can dine together, but not do business” — and that venture‑timing and announced entries by incumbents can chill funding rounds. The result is a coordinated shrinkage of routes that startups need — distribution, inputs, capital and people — often before a product even reaches consumers.

Regulatory rethink and stakes

Antitrust thinking is shifting. For decades enforcement focused narrowly on consumer prices; now authorities in both the U.S. and China are paying closer attention to market structure and the fairness of the competitive process. Think of Amazon’s Whole Foods acquisition and the arguments made by U.S. FTC chair Lina Khan about cross‑market integration raising barriers. In China the 2021 ruling against Alibaba (阿里) for e‑commerce exclusivity — a RMB 18.2 billion fine — showed regulators will act on platform lock‑ins. But supply‑chain exclusion and labor‑market restraints are harder to police. If non‑competes, vendor boycotts and capital plays systematically close windows of entry, consumers may enjoy lower prices now — but will the industry still produce new ideas five years from now? How to rein in startups without stopping investment and innovation? That is the debate regulators must settle.