Characteristics, behavioral patterns and China's strategy for Internet capital in a global perspective Open Access

From an economic perspective, Internet capital represents an innovative, creative and adhesive capital factor. It integrates and configures monetary capital with knowledge, technology, data and other high-tech resources while also incorporating traditional factors, such as labor and land. This amalgamation becomes an emerging driving force that reorganizes resource factors and techno-economic patterns, reconstructs organizational models and market rules, reshapes economic structures and industrial directions and transforms competitive landscapes and governance methods. It is a concentrated manifestation of the socialization of production at a higher level.

Similar to industrial, commercial and financial capital, Internet capital essentially serves as a production factor. Capital is a tool for resource allocation in the market, a means and method for economic development and a crucial link that drives the aggregation and configuration of various factors, thus playing a pivotal role in productivity growth. As Marx (2004a, b, p. 393) stated, money capital is considered “as the primus motor of every incipient business, and as its continual motor,” and “therefore appears as the primus motor, lending impetus to the entire process” and “the totality of the elements of production announces itself at the outset as productive capital …, therefore the process of production itself appears as a productive function of industrial capital” (Marx, 2004a, b, p. 94). Neoclassical growth theory identifies capital formation and technological innovation as key growth drivers. Capital, together with technology, human and natural resources, constitutes the ‘four wheels of economic development’ (Samuelson and Nordhaus, 2007, p. 580).

Internet capital is also a unique capital factor. Compared to industrial, commercial and financial capital, Internet capital is more closely integrated with knowledge capital, human capital and factors like information technology and data. It has distinct high-tech attributes and “data-friendly” characteristics. In terms of money capital, Internet capital invests in fields such as the Internet, big data and artificial intelligence – engines of the new technological revolution and industrial transformation. Regarding production capital, Internet capital is used to purchase, allocate, utilize and even create assets, including critical Internet software and hardware, data factors, digital intelligence technologies and associated human capital. As for commodity capital, the products driven by Internet capital are data commodities, digital infrastructure services and digital wealth. Acting as a bridge that aggregates and allocates innovation factors, Internet capital drives the flow and transformation of advanced quality factors into new productive forces. It has led the way in the production sector by transforming data resources into productive factors and marketizing data factors. This has facilitated the integration of market players, reconstructed organizational models, established digital infrastructure, sparked the emergence of the platform economy, fostered digital industrial clusters and created new competitive advantages for nations. In the distribution field, it has reshaped the domains of economies of scale, economies of scope and the sharing economy, integrating labor, knowledge, technology and data factors into an “online-offline” value creation and benefit-sharing system. This reconstruction of mechanisms allows knowledge and data factors to participate in the distribution, enhancing shared prosperity and promoting the value realization and vitality of innovative factors such as technology and talent. In the governance field, Internet capital has propelled the modernization of national governance in terms of technical means, organizational structures and operational mechanisms.

From a functional perspective, Internet capital, as a form of emerging social overhead capital, functions by investing in the establishment of digital platforms, a new type of infrastructure, to control the foundational power over crucial Internet technologies and data resources. It provides essential data and digital and intelligent technology support for the digital transformation of industries and the seamless circulation of the national economy. While pursuing commercial goals, Internet capital is also at the core of nurturing new productive forces and driving high-quality development. Notably, the role of Internet capital as social overhead capital reflects the trend of socialized productivity development, thereby granting it greater market influence than traditional overhead capital.

Firstly, Internet capital is a specific type of social overhead capital that aims to provide necessary infrastructure and economic frameworks for the development of the market economy, operations of private capital and functioning of industrial sectors, including foundational investments, such as highways, irrigation and water projects and public healthcare systems, all strategically designed to promote commerce and trade. These large-scale infrastructure investments are characterized by their integrated nature, indivisibility and increasing returns to scale. Due to external economic or spillover effects, they often cannot implement widespread commercial fee-based operations. Therefore, government intervention is necessary to ensure the sustainability of these infrastructure investments. Since the information technology revolution in the latter half of the 20th century, computer and Internet innovations have given rise to new types and forms of infrastructure, such as information communication systems. Through investments in the creation of digital platforms, Internet capital provides new infrastructure support, including data factors and Internet hardware and software services, which are crucial for the development of the digital economy and emerging industries. As Samuelson and Nordhaus (2007, p. 580) stated, the emergence of computers and the information superhighway in the 21st century plays a role comparable to that of railroads and highways in the past. These innovations not only enhance societal productivity but also provide the foundational infrastructure necessary for the rise of emerging industries.

Moreover, Internet capital is an emerging social overhead capital characterized by network externalities. New infrastructure investments driven by Internet capital exhibit network externalities, which means that the returns or efficiency of these projects positively depend on the scale and density of their user base. The traditional overhead capital investments create physical entity platforms such as roads, waterworks, utilities, malls, financial platforms and tech incubators. In contrast, Internet capital investments establish a novel type of infrastructure carrier – digital platforms. Specifically, Internet capital has created a new form of infrastructure and spatial network known as the digital stack through the commercialization and management of key software and hardware, thereby controlling the exploitable data resources and foundational infrastructure capabilities driving transformational innovation. Unlike conventional infrastructure platforms that possess the attributes of a public good but often struggle to generate revenue due to external economies, digital platforms with network externalities transcend the constraints of nonprofit attributes. Rather than relying on government funding or state-owned capital initiation, the establishment, investment and operation of these entities primarily rely on private Internet capital. In fact, almost all global digital platforms have been established by private capital. For instance, “private Internet capital in the United States opens new vistas in virtual spaces for the exercise by digital platforms of the infrastructural power more usually exercised by the sovereign state” (Kelton et al., 2022).

From the organizational structure, Internet capital, as a new form of monopoly capital, infiltrates and controls industrial and commercial capital by monopoly through the accumulation of big data or the power of digital platform infrastructure. The domestic and global monopolistic expansion of Internet capital is a direct consequence of the private commercial logic at play and may pose challenges to government regulation and national security.

Internet capital is a form of monopoly capital. Monopoly capital emerges with concentrated production and capital, aiming to secure substantial monopoly profits by exerting exclusive control or domination over the production and markets of certain sectors. This type of capital manifests in various forms, including industrial monopoly capital, commercial monopoly capital and banking monopoly capital (Editorial Team of An Introduction to Marxist Political Economy, 2021). The merging or infiltration of banking monopoly capital and industrial monopoly capital results in composite monopoly capital forms like financial capital. Financial oligarchs or capital control banks and industrial and commercial enterprises, through credit, equity or personnel ties, while expanding globally via capital exports and international monopoly alliances (Hilferding, 1994). In contrast to the monopoly methods of financial capital based on credit or equity, Internet capital primarily monopolizes data resources and controls key Internet technologies and digital platform infrastructure. This enables it to exert dominance over industrial and commercial capital and even the national economy from the perspectives of finance, technology and supply chain while also pursuing global expansion.

Internet capital represents a new form of monopoly capital. It develops and maintains its monopolistic advantages by initiating and leading innovations in key Internet technologies and establishing digital platforms. This type of capital is characterized by a combination of technological, data and natural monopolies, driven by the network externalities of digital infrastructure. Private Internet capital funds the design and construction of software and hardware infrastructure within the global digital stack to reap commercial benefits and global investment returns (Howard, 2015, p. 35). The digital platforms created in this process wield digital infrastructural power by monopolizing the accumulation of big data in “real-time cloud storage” (Farrell and Newman, 2019). Based on Internet technology innovation and digital infrastructure control, this monopolistic advantage emerges in peripheral spaces overlooked by existing regulatory frameworks. On the one hand, digital platforms evade domestic and international regulation during their initial formation due to their “disruptive innovation” nature, allowing them to accumulate and control big data. On the other hand, controlling vast data resources by private Internet capital strengthens the leading position of digital platforms in innovation, which enables digital platforms to challenge the sovereign monopoly of national security. In the digital and intelligent economy dominated by Internet capital, allowing unrestricted access to artificial intelligence, the Internet of Things, big data and cloud storage can yield significant economic returns. This has reduced the consideration and actions taken by countries and governments regarding the security regulation of digital platforms (Samuelson and Nordhaus, 2007, p. 580).

Internet capital is a result of technological innovation, yet it also serves as a new driving force for technological innovations under emerging technologies. The digital platforms established by Internet capital facilitate industrial innovation and the development of new productive forces in the digital age by providing elements such as data and technology, along with essential infrastructure services. However, this also gives rise to a series of risks and challenges. Internet capital exhibits tendencies and characteristics such as foundational innovation, platform monopoly and virtual sovereignty-driven expansion.

The profit-seeking motive of capital drives it to gain competitive advantages and earn excess profits through innovation in a competitive market. Capital must revolutionize “the technical and social conditions of the process, and consequently the very mode of production … before the productiveness of labor can be increased.” (Marx, 2004a, b, p. 366). The technical foundation of modern industry is revolutionary, “By means of machinery, chemical processes and other methods, it is continually causing changes not only in the technical basis of production, but also in the functions of the laborer, and in the social combinations of the labor-process.” (Marx, 2004a, b, p. 560). “… modern industry, which makes science a productive force distinct from labor and presses it into the service of capital.” (Marx, 2004a, b, p. 418). As a fusion of technological and industrial capital, Internet capital is marked by a strong drive for innovation and a unique logic of innovative behavior. It primarily leads to the foundational technological innovation and restructuring of infrastructure. This is fueled by revolutionary breakthroughs in key Internet technologies, which drive an innovative allocation of production factors and a qualitative transformation in productive forces. Such advancements give rise to new industries, new models and new drivers of growth, exemplified by the digital intelligence revolution that has spurred the rise of the digital and intelligent economy. In the digital economy, Internet capital plays a dominant role in the excavation and innovative transformation of digital resources by developing key software and hardware for commercial use and investing in the extraction and distribution capabilities of digital platforms. Internet capital builds the critical infrastructure of the digital economy, creating a new cyberspace and virtual territories. The core of this critical infrastructure is the digital stack, composed of five layers of aggregate infrastructure, from the user interface to geospatial value and supply chain, involved in “a transformation in the technical infrastructure of global systems … Which produces new geographies and new territories” (Kelton et al., 2022). The stickiness of digital stacks “comprehensively reshapes the conditions of economic exchange in a stateless network,” such materialization and legitimation of the stateless network are impossible in traditional markets (Cohen, 2019, p. 50). Internet capital develops immersive technologies for residents, integrating them into the Internet of Everything (IoE), artificial intelligence (AI) and big data fusion structures within the digital stack's spatial network. In a virtual world network composed of augmented reality, virtual reality, headsets, smart glasses, wearable devices and sensors, residents and consumers project information, ideas and imagination onto the surrounding world, weaving it into every conversation and exhibiting it within residential, professional and educational environments. A new cyberspace and virtual territories are created and expanded through intuitive information delivery, AI-assisted interactions and secure encrypted information and digital payments (René and Mapes, 2020). Currently, Internet giants like Google, Amazon, Microsoft and Meta, together with emerging technological forces like OpenAI ^[3], lead the global AI technological revolution and industrial transformation. They promote innovative breakthroughs from decision-making AI to generative and even general AI, cultivating an AI industrial chain covering the foundational layer (sensors, AI chips, data services and computing platforms), technological layer (algorithm models, general technology) and application layer (industry solutions, hardware and software products) ^[4].

Unlike technological innovation in traditional sectors, which is typically government-led, technological innovation and business transformation in the digital economy are predominantly driven by private Internet capital. This private capital funds the research, development and manufacturing of global Internet hardware, the rapid accumulation and storage of big data and the real-time extraction or commercialization of these data for business purposes. As a result, by investing in Internet hardware technology and data resources, private Internet capital has gained control over the extraction of society's digital resources (OECD, 2020). Across the globe, critical infrastructure such as digital stacks and the rights to extract their resources are predominantly developed and controlled by private Internet capital. “They create and deploy commercially viable digital software and hardware across layers of the stack's human-computer interface and geospatial land, subsea and space domains” (Kelton et al., 2022). In the USA, for instance, private Internet capital has gained dominance in innovation and platform control within the digital economy since the 1980s. This has been achieved through creating and managing digital stacks by companies such as AOL, Altavista, Google, Meta, Apple and Amazon (Barrinha and Renard, 2020). Entering the 21st century, the role of the US government in leading technological innovation and driving national economic development has diminished. Private Internet capital and the digital platforms it leads have acquired some of the resource extraction and innovative transformation capabilities traditionally under the purview of sovereign governments. The power to extract and control resources and the means to transmit commands and manage information – traditionally held by governments – are increasingly being possessed or shared by private commercial platforms (Bratton, 2016, p. 375). Internet capital is committed to creating and upgrading digital platforms, focusing heavily on funding cutting-edge technological innovation and its commercial applications. For instance, support from US private Internet capital for startups and commitments to large commercial research budgets by Internet digital platforms far exceed the support and commitments from the US government. This trend is evident even in the defense and security sectors. In some critical technology areas of the Internet and the digital and intelligent economy, the US government has largely abandoned interest and effort in initiating and sponsoring technological innovation. In 2019, Michael Kratsios, who served as the Deputy Assistant for Technology Policy under the Trump Administration, stated that digital platforms should remain neutral and suggested that the best path forward for America was for Silicon Valley to independently determine its own course without government intervention (Webb, 2019, p. 86).

Private Internet capital investment in creating digital platforms as new infrastructure provides an “incubator” and foundational support for technological innovation and industrial transformation. From a technical perspective, private Internet capital establishes virtual spaces that wield the power of infrastructure for innovation, thus paving new pathways. Comparing the influence of Internet capital as technological infrastructure with the historical infrastructure influence exerted by the US government reveals the former's uniqueness in creating a digital stack through software and hardware development, thus exploring new virtual territories. Digital platforms, empowered by the form of the digital stack, assume the innovation jurisdiction that was traditionally held by governments (Weiss and Thurbon, 2018). Based on digital stacks, digital platforms manage the participants' thoughts and behaviors through algorithms and the commercialization of big data, creating a so-called “virtual sovereignty” that operates independently of government regulation or control. These platforms gain a form of “quasi-sovereignty” over the virtual territory of the digital landscape, exercising powers over infrastructure that were previously reserved for states (Kelton et al., 2022). Government and Internet capital's acquisition and exercise of digital infrastructure power is not a “zero-sum game.” Public and private power networks are dynamic and fluid, where private capital's pursuit of technological innovation and infrastructure power sometimes occurs with state support or acquiescence, even though digital platforms do not pursue or exercise this power with national security considerations, particularly when commercial interests are at stake (Denardis, 2014). Internet technology innovations in Silicon Valley initially benefited from government financial support, such as assistance provided to Google by the US Defense Advanced Research Projects Agency (DARPA) and the National Science Foundation (Nesbit, 2017). As the commercial development of the digital economy progresses, this highly profitable business model has attracted a significant influx of private Internet capital into digital platform development and application. The state's role as an incubator and beneficiary is diminishing, and, ultimately, private Internet capital is replacing state-led investment in emerging digital technologies (Kelton et al., 2022), becoming the primary source of funding for innovation in digital intelligence technologies and industrial transformation. The commercial innovation driven by Internet capital and the exercise of infrastructure power by the state are not mutually exclusive; rather, the former exerts a positive influence on the latter. Exercising infrastructure power through digital platforms does not imply a decline in the state's innovation capacity (Weiss, 2005). For example, businesses have reinforced and supported US diplomatic and military power through industrial efforts and financial backing, creating a mutually beneficial symbiotic relationship. In the digital age, this relationship further secures the power and profits of American companies. What was once government-led in terms of military-civil dual-use technology innovation and incubation has shifted to being driven by private Internet capital, which funds digital platform technology innovation and seeks commercial returns (Weiss, 2014). The state (government) and Internet capital have evolved into a “governed interdependence” (Webb, 2019, p. 86). After the Second World War, the US government solidified its hegemonic position by controlling and managing private technological innovations, creating a so-called “spin-in” relationship with the private sector (Weiss, 2014). Through national security programs, the US government provides capital, funding and project management services for private sector innovation, fostering university collaborations with intelligence agencies, incubating technological innovation outcomes and commercializing them (Mazzucato, 2011, p. 20). As of 2018, the private sector's contribution to US R&D surpassed that of the national security sector by threefold, with an even greater share in military-industrial complex R&D (Sargent, 2021). The high-tech industry was once the primary source of national competitive advantage. However, the Internet capital and business technology sectors, leveraging their strengths in artificial intelligence, are gradually surpassing the traditional defense industrial base in their role within the international competition. Over the past 2 decades, US Internet business technology firms have reaped huge commercial benefits by being committed to maintaining a long-term leading position in artificial intelligence without severing ties between the digital platforms and the Department of Defense; instead, it has fostered their collaboration. For example, in 2022, Google, Oracle, Microsoft and Amazon Web Services signed a potential contract for the Joint Warfighting Cloud Capability, which includes top-secret clearance work. This indicates that the technological innovation capabilities of private Internet companies have been recognized and utilized by the state (Garamone, 2022).

The digital-intelligence technological revolution and industrial transformation, together with the innovations in the sharing model and modernization in governance, driven by Internet capital, inject innovative momentum and governance efficiency into fostering new productive forces, high-quality development and advancing common prosperity.

First, as a dominant force in the development of the digital and intelligent economy and new productive forces, Internet capital provides the engine of technological innovation and supports new infrastructure for high-quality development. The development of the platform economy dominated by Internet capital drives China's technological, industrial and economic structural transformation towards informatization, digitalization and intelligence. The platform enterprises are increasing their R&D investment, strengthening fundamental research and tackling key and core technologies to reinforce the essential technologies of digital intelligence and further support small and medium-sized techs in innovation. By leveraging industrial Internet platforms, they upgrade traditional industries and develop advanced manufacturing capabilities, contributing to the establishment of a modern industrial system and wealth generation. Besides, Internet capital develops digital infrastructure and public goods, such as 5G, big data centers, intelligent scenarios and the industrial Internet, building intelligent, comprehensive infrastructure of digital information that is high-speed, ubiquitous, unified, cloud-network integrated, smart and agile, green and low-carbon, secure and controllable. Such infrastructure establishes vital information channels for economic and social development, accelerating the circulation of the national economy, enhancing the efficiency of production and exchange, making markets more prosperous and orderly and ensuring online consumption is more convenient and of high quality.

Second, leveraging digital platforms and digital intelligence technologies, national governance is continuously advancing towards becoming more intelligent, comprehensive, personalized and refined. Internet capital provides the government with platform support, as well as digital intelligence means, to regulate income distribution and promote equal access to public services. This improves the precision of redistribution tools, including taxes, social security and transfer payments and enhances the efficiency of public services in education, healthcare, elderly care, epidemic prevention, disaster relief, etc. fostering new forms of Internet philanthropy and the conversion of public welfare and commercial resources. With digital platforms, the public's demands and pressing issues are addressed and resolved more swiftly.

Third, digital intelligence technologies and the digital economy are key areas of international competition. The foundational research and development, breakthroughs in core technologies and construction of digital infrastructure dominated by Internet capital not only impact the resolution of critical bottlenecks and the addressing of weaknesses in key areas affecting the national economy and people's livelihoods but also play a crucial role in achieving technological self-reliance and strengthening national competitive advantages. Additionally, these efforts are vital for maintaining digital economic autonomy and digital sovereignty. Compared with Western countries, Chinese Internet capital shows the institutional characteristic of “coordinated development of State-owned and private economies” in the fields of technological innovation and industrial transformation, namely, allowing Internet capital (enterprises) of different ownership to participate in the development of digital intelligence technologies and new infrastructure such as digital platforms, contributing innovative power to develop internationally competitive digital industry clusters. In the field of industrial Internet, for instance, among the top 30 Chinese industrial Internet companies in 2023, there are platforms founded by private Internet capital like Huawei Cloud, Alibaba Cloud, Tencent Cloud, Baidu Smart Cloud, JD.com and ROOTCLOUD, public enterprises like COSMOPlat, CASICloud, Baosight Software and XCMG Hanyun, as well as platforms built by Hong Kong, Macao, Taiwanese and foreign-invested enterprises like Foxconn Industrial Internet (Fii)^[5]. Together, they form an innovative driving force for China's industrial transformation featuring “digital intelligence.” However, the R&D input and innovation capabilities of Chinese Internet capital still significantly lag behind those in leading digital economies like the United States. A statistical report from the European Commission reveals that among the top 20 companies worldwide for R&D investment in 2023, US firms held the top four spots, which were Alphabet, Meta, Microsoft and Apple. In contrast, China had only Huawei and Tencent ranked fifth and nineteenth, respectively ^[6].

Internet capital creates digital platforms with network externalities, leading to a new form of monopoly known as platform monopoly, which features both technological monopoly and natural monopoly. Internet capital has continuously strengthened its monopolistic position by increasing control over digital platforms and big data resources. This not only meets the new demands of socialized production but also provides Internet capital with significant market control. However, it also raises a series of risks, issues and challenges.

The monopoly of Internet capital is an inevitable result of Internet capital leveraging digital intelligence technology innovation and infrastructure development to achieve a monopolistic position in cutting-edge technology and data resources for pursuing excess profits.

First, Internet capital and its dominant platform operations have replaced the traditional role of governments in exercising infrastructural power within the digital economy because governments are unable to control in real-time the collection and distribution of big data generated by algorithms, which take place on platforms, i.e. virtual spaces where interactions occur both materially and algorithmically. The platforms, encompassing online marketplaces, desktop and mobile computing environments, social networks, virtual labor exchanges, payment systems and trading systems, have become the venues for an increasing number of economic as well as social and cultural activities. A platform is not a continuous physical space, but a virtual space defined by usage protocols, data flows and algorithms. However, this kind of virtual space is distinctly delineated in both the logical and experiential sense; platforms “vigilantly” guard the virtual boundaries of digital economic operations (Cohen, 2017).

Second, the characteristics of automatic generation, deployment and utilization of big data have influenced the formation of the monopoly of digital platforms. The “endless, exponential” generation of big data enables digital platforms to advance the interconnectedness of private Internet capital within virtual domains where “competition and regulation struggle to function,” resulting in new organizational forms (Schneier, 2013). The control exerted by Internet capital and digital platforms over these open data resources exceeds the traditional scope of state control over resource extraction and innovative transformation (Cohen, 2019, p. 41).

Third, Internet capital and digital platforms exercise monopoly power over digital infrastructure through the network power inherent in digital stacks. The digital platform's ability to extract and dominate data resources is built upon its accumulated network power within the digital stack. The diversity and variability of network services, along with the resulting random yet controllable modular structure, limit the entry of external competitors, thereby ensuring the stickiness of the network in global development (Cohen, 2019, pp.41–51). Digital platforms have served as the “gatekeepers” and exclusive service providers for software and hardware systems of the digital stack. The monopolistic benefits of these digital platforms also ensure that private Internet capital continues to invest in the software and hardware upon which consumer smart devices and applications rely (Kelton et al., 2022).

Internet capital dominates vast socioeconomic resources, strengthening the dominance of digital platforms in technological innovation while also challenging the “monopoly position” of sovereign nations and their governments regarding national security affairs.

First, Internet capital gains the so-called “virtual sovereignty” and a technological capability that transcends traditional regulation by virtue of disruptive technological advantages in commercial development and control of critical software and hardware, as well as the resulting influence on human behaviors. For instance, successive US administrations and Congresses have struggled to respond to the “permissionless innovation” practices of digital platforms due to a lack of technical expertise in the digital economy (Webb, 2019, p. 86). The USA has introduced antitrust bills, such as the Digital Platform Commission Act of 2022, the American Data Privacy and Protection Act, the Open App Markets Act and the American Choice and Innovation Online Act, to strengthen oversight and regulation of digital platforms. The US government has expressed concerns over the authority and control exerted by platform capital in the digital economy. In 2018, the US Congress held hearings to address some of the misconduct by digital platforms (Choucri and Clark, 2011). However, these attempts to “bring to justice” the monopolistic behaviors of digital platforms have not been fully effective. Even with legislation, the effectiveness of government regulation or oversight of digital platforms remains in question (Kelton et al., 2022).

Second, the monopoly of Internet capital is not merely a simple technological monopoly but also a monopoly of digital platforms over new infrastructure capabilities. Therefore, we should understand such platform monopoly from the perspective of the social construction of digital technology. The digital stacks developed through investments by Internet capital combine human, social, computational and physical elements, forming the social foundation of virtual sovereignty and infrastructural power – the digital stack comprises aggregative layers of digital infrastructure, including human-machine interfaces, ground sensors, local digital cellular and regional communication networks, Internet gateways (including undersea cables), landing points and satellite systems, as well as geospatial value, resources and supply chains (Rogers and Bienvenue, 2021). Some multinational Internet capitals and digital platforms, such as Alphabet (Google), Meta, Amazon, Apple and Microsoft, have obtained infrastructural powers in the digital economy that should be exercised by the government. The infrastructure power acquired by these digital participants, which involves key Internet technologies, includes extraction power – the ability to extract and deploy resources, such as material and human resources, with social consent and legal legitimacy (Weiss and Thurbon, 2018) and transformative power – the capacity to initiate, sponsor and leverage substantial technological innovations for the benefit of the nation (Mann, 2008). The transformation of the digital economy, led by Internet capital and digital platforms, to some extent, comes at the expense of national security control since “commercial incentives and national security needs are often misaligned” (Lewis, 2020).

Third, the state's legal monopoly over territorial sovereignty is challenged by the monopolistic forces of digital platforms in virtual sovereignty. One characteristic of sovereign power is maintaining independence, i.e., the ability to exclude the social and political influence of foreign actors (Krasner, 1999). Digital interference can impact a nation's ability to mobilize resources, which includes securing public consent and effectively communicating directives. Governments are vulnerable not only to attacks from foreign hostile actors but also to domestic hostile actors who use digital platforms and social media to launch cognitive assaults on the legitimacy of the state. Adversaries amplify domestic social and political issues through digital platforms, utilizing the so-called “technological neutrality or political agnosticism” of digital platforms to undermine or reallocate state power. The Internet capital's monopoly in the digital economy and virtual sovereignty challenges the dominance of state sovereignty in cyber affairs (Choucri and Clark, 2012). Given that foreign hostile forces could use digital platforms to conduct disruptive activities and exacerbate domestic social cognitive vulnerabilities, the USA and other Western countries have reiterated that governments should possess the necessary capabilities for extracting and mobilizing digital resources (Levite and Shimshoni, 2018).

Internet capital gains monopolistic power over infrastructure like digital platforms through the extraction, accumulation and commercialization of big data, influencing the thoughts and behaviors of individuals and consumers. The digital stack provides digital platforms with the technological possibilities and opportunities for commercial surveillance, allowing them to use algorithms to accumulate and sell big data in real time, thereby guiding or shaping consumer choices, leading to violations of personal privacy rights without the consumer's awareness (Vijoen, 2021).

First of all, platform companies and advertisers use economic incentives to induce and encourage smart device users to stay online and use apps, thereby obtaining their personal information for profit opportunities (Khan and Pozen, 2019). Subsequently, platforms utilize data mining and algorithms to precisely pinpoint consumers' tastes, preferences and needs, shaping consumption patterns and their spatial connections in real time (Bradshaw and Howard, 2018, p. 21). Research indicates that US digital platforms and the private Internet capital behind them leverage digital intelligence technologies and algorithms to “snoop” on personal information as a means to collect big data in real time or purchase it from intermediaries. They then sell this data to willing advertisers to influence consumer perceptions and behavior (Kelton et al., 2022). Therefore, protecting consumer privacy involves not only preventing “unrestricted data collection” but also shielding individuals from the “inherent biases” of surveillance system algorithms (Matzner, 2014).

Digital technologies are not value-neutral – they have a powerful ability to “design decisions” and are bold in deriving data and insights from risky innovations or experiments (Hartzog, 2018, p. 8). For example, in 2010, Facebook (the predecessor of Meta) in the USA conducted an undisclosed targeted advertising experiment on 61 million users to study how to maximize advertising profits (Starr, 2019). This online “ad tech” ecosystem serves as key evidence of digital platforms exercising infrastructural power, leveraging the Internet to influence individual choices and curate the information environment in ways invisible to consumers. This has allowed platforms to abuse monopoly power to an unprecedented extent – not only dominating the online advertising market but also controlling consumers' access to information flows (Srinivasan, 2020). For instance, Google and its parent, Alphabet, exhibit such monopolistic tendencies across various market segments but deny the existence of this kind of monopoly power and its infringement on consumer privacy. According to the “Investigation of Competition in Digital Markets” issued by the U.S. House of Representatives (2020), if left unchecked, the entry barriers and network effects in Google's markets would lead to single-firm dominance and overall market concentration (p. 247) and Google increasingly functions as an ecosystem of interlocking monopolies, violating antitrust laws (p. 15). Moreover, by exploiting legal loopholes, Facebook has similarly impacted the information environment of approximately 1.79 billion users worldwide. It has maintained its monopoly through a series of business practices that violate competitive principles and the lack of competition has resulted in “worse privacy protections for its users and a dramatic increase in misinformation on its platform” (U.S. House of Representatives, 2020, p. 14). As social networks have become consumers' primary means of communication, Facebook has gained additional advantages through its monopoly. While pretending to prioritize user privacy, it has continuously amassed psychological profiles of its users. Leveraging its status as a mainstream social platform, Facebook sells consumer access to a data broker ecosystem that eagerly seeks personal data, blatantly violating the privacy rights involved in user access (Srinivasan, 2019).

Internet capital can form a kind of cutting-edge technology monopoly through innovations in digital intelligence technologies and establish a data resource monopoly by establishing data platforms with network externalities. These two aspects often advance in tandem – namely, large Internet capital entities gain the extraction and control rights of big data resources through the commercialization of critical hardware and software, thereby forming digital platforms integrating both technology monopoly and data monopoly. In contrast to Internet capital in digital powerhouses like the United States, which aims to achieve a monopoly advantage through innovation in cutting-edge digital intelligence technologies, Chinese Internet capital often focuses on expanding digital platforms to secure a dominant position in data resources and seeks profits through traffic.

Specifically, the monopolistic strategy of American Internet platforms focuses on deep vertical integration within industries, such as Amazon in retail, Google in search and Apple in smartphones. In contrast, Chinese platforms tend to adopt a “cross-industry dominance” approach. Super platforms leverage their foundational service capabilities to create traffic and data concentration advantages, then use these to extend their monopolistic position into other sectors, achieving “dual monopolies” across multiple fields. US platforms focus on technological innovation and support for small and medium-sized enterprises, while Chinese platforms emphasize market scale and compete for traffic in the consumer Internet sector. The research and development expenditure of the five largest Internet platform companies in the USA is 7.4 times that of the top five platforms in China (namely, Tencent, Alibaba, Meituan, JD.com and Baidu) and their R&D intensity is 1.3 times greater. Although the patent numbers are comparable between China and the USA, Chinese patents are primarily focused on the application level, and China still faces bottlenecks in critical technologies such as chips and operating systems.

The USA is advancing with both the consumer Internet and the industrial Internet, while China is primarily focused on the consumer Internet, with its industrial Internet still in its early stages. Chinese Internet platform giants mainly cater to the consumer (“C-side”) market and tend to adopt a traffic economy model emphasizing horizontal expansion within the consumer Internet. These platforms often have overlapped functionalities and a strong demand for monetization. They progress from fan economies, social networks and live streaming to mini programs, ultimately moving towards traffic monetization through e-commerce (Ouyang, 2023). Chinese Internet capital has achieved a monopolistic position in data resources by expanding digital platforms, essentially becoming a “natural monopoly” capable of leveraging network externalities. However, if this evolves into platform monopolistic behavior characterized by “cross-industry dominance, prioritizing consumption, and monetization above all,” it could lead to a low-level monopolistic expansion trap focused on “data monopoly over technological innovation.” This would hinder efforts in fundamental and critical smart technology breakthroughs. Additionally, it could give rise to issues or risks such as monopoly infringement, disruption of market order or competitive environment and potential threats to social stability or national security.

In recent years, some major Internet platforms have engaged in practices that abuse their market dominance to gain an unfair competitive advantage. These include forcing “choose one of two” scenarios, exploiting big data to discriminate against customers, burning cash to dominate the “community group buying” market, engaging in predatory mergers and acquisitions and tolerating counterfeit goods, information leaks and privacy violations. Such actions disrupt market competition, hinder innovation by small and medium-sized enterprises, and harm the interests of business owners, workers and consumers. This results in obstacles to high-quality development and distorts the distribution order, causing detrimental effects on common prosperity. It is imperative to regulate these practices according to the law, enforce strict supervision and implement effective governance.

The pursuit of profit by capital drives the process of accumulation and expansion, with monopolistic capital having an even stronger motive for expansion. On the one hand, the scale advantages resulting from socialization encourage capital to consolidate its market dominance through expansion. On the other hand, the substantial scale of monopolistic capital intensifies competitive pressures among monopolists. Due to its unique characteristics, Internet capital not only infuses this expansion with the spirit of a tech race but also extends its reach from physical to virtual spaces. In the quest for digital resources, it continually challenges the blurred boundaries between society, businesses and governments in the virtual realm, introducing new risks and challenges.

The innovation and industrial application of digital intelligence technology, driven by Internet capital, are primarily advanced by Internet tech companies from a few countries, such as the USA and China. However, the sources of capital or investment are not limited to any single country or region. Furthermore, the commercial application and industrial realization of these technological innovations, along with the release of network externalities from digital platforms, depend on the global market. The development of global Internet hardware is largely funded by private Internet capital within the global wealth chain, which includes private or state-owned capital from various countries, while Internet software is designed and developed by companies in technologically advanced countries like the USA, but their commercial users are spread worldwide. Providing better technological services to global users has become a business priority for these companies (Qiu et al., 2016).

For instance, digital infrastructure, such as international undersea cables, satellites, cloud storage and bandwidth, is established by major Internet tech companies leveraging global wealth and supply chain systems. In 2021, Google invested in constructing approximately 8.5% of the worldwide undersea cable network, spanning a distance of over 1.12 million kilometers (Cooper, 2021). During the recovery period of international capital flows following the end of the 2008 global financial crisis, private or government-backed Internet capital and large platform companies from countries like the United States surged into the Indo-Pacific region. This movement was facilitated by a “multilateral consortium” mechanism of digital infrastructure ownership, aiming to jointly tap into the region's unique resources – the world's largest user base and Internet traffic. Governments or private Internet capital and digital platforms from some Indo-Pacific countries are also involved and closely collaborate with large platform companies like Google. As a critical component of transnational digital infrastructure, fiber optic cable networks carried 99% of global Internet traffic as of 2017, in which Meta's 2Africa cable was financed and laid in collaboration with China Mobile (Winseck, 2017).

It should be noted that the development and control of these infrastructure networks by Internet capital and digital platforms are intertwined with geopolitical interests. On the one hand, when Internet capital invests in the development of high-tech manufacturing, it often uses multi-jurisdictional capital transactions for cross-border expansion and integration into the global supply chain. This enables Internet capital and digital platforms to continuously enhance their leadership in global technology innovation and industrial transformation. At the same time, the technological innovation and commercialization activities of Internet capital and digital platforms rely on the support of the global supply and value chains, including global financial partners, project collaborators and technology sharers, sometimes even involving state-owned or private companies from strategic competitor countries. Transnational Internet capital is evolving into networked capital that seeks to evade responsibility while generating wealth. The business models and practices it employs in its investment operations are shifting towards the secretive methods of a global “wealth chain,” increasingly utilizing a hybrid form of financial products (Seabrooke and Wigan, 2014). On the other hand, as the creation of intellectual property and patents in Internet technology trends towards “globalization,” the sources of vitality for innovation activities related to the development of digital infrastructure are no longer confined to any single country or region. Digital infrastructure has acquired the characteristics of a global public good. This means that private Internet capital and digital platforms, when expanding their business globally, might overlook considerations related to national security interests (Weiss and Thurbon, 2018). For instance, a significant portion of the commercial profits for US Internet capital comes from global production and distribution chains that operate outside national regulations. The “de-territorialized” nature of Internet capital and digital platforms makes them heavily dependent on global technology and financial networks, which can lead to potential conflicts with national security interests (Kelton et al., 2022).

Internet capital exhibits high liquidity since it provides investment and financing for creating digital services and constructing network infrastructure on a global scale. Its reach extends into all commercially viable spaces and sectors of the digital economy. For instance, major digital platforms dominated by Internet capital, including Amazon, Microsoft, Google and IBM, have developed and controlled a significant portion of the world's cloud physical infrastructure and platform services (Bala et al., 2020). Unlike traditional telecom providers, digital platforms, as Internet technology service providers, often operate beyond the usual scope or capacity of government regulation when developing and supplying digital tech services and driving unprecedented data commercialization. This accelerates the flow of Internet capital into various dimensions or spaces of network connectivity and service provision. For instance, the strategic influence of Alphabet Inc. has developed across multiple layers of the digital stack, covering areas from Internet technology product supply to global healthcare services. As Google claims, its mission is to leverage high-quality hardware, useful software and cutting-edge AI to provide a range of products – from search pages to maps, Gmail to photos – and tools that make it easier for people to access knowledge, success, health and happiness, which include high-resolution phones, wearable devices, laptops and Nest products for home (Osterloh, 2023). Internet capital has leveraged the power of digital platforms, algorithmic capabilities and the advantages of general-purpose technologies to provide hardware and software services along with technological solutions in many sectors, exhibiting a strong tendency towards cross-sector expansion, which increasingly shapes a “digital dominance” across various fields of economic and social life. For instance, some multinational Internet capital ventures into the fintech sector to engage in technological innovation and commercialization, expanding the service to anywhere in the world with business opportunities. In recent years, Apple launched a credit card service, and Google initiated a consumer bank account plan. Moreover, Apple's development of its own ARM microarchitecture processors to replace Intel processors demonstrates a new, cross-sector technological paradigm involving corporate integration or independent capacity and authoritative control (The Guardian, 2020).

Through the commercialization and control of critical software and hardware, and by virtue of the consequential impact on human economic and social behavior, Internet capital has established a virtual sovereignty that surpasses state sovereignty, posing risks to national security. Although digital platforms claim to maintain technological neutrality, as Microsoft asserts, “We as a global tech sector need to become a trusted and neutral digital Switzerland” (Smith, 2017), they acquire virtual sovereignty in cyberspace and the digital field. Virtual sovereignty refers to the power over critical infrastructure or the driving force of innovative transformation created by Internet capital and controlled by digital platforms within the new socio-technical spaces within the virtual domains emerging in the digital age (Kelton et al., 2022). As early as 1986, scholars noted that the invention of new organizational technologies significantly enhanced the ability to control people and territories (Mann, 1986, pp. 1–3). Currently, “in ever more areas of life, algorithms are coming to substitute for judgment exercised by identifiable human beings who can be held to account” (Crawford, 2019). From the perspective of the technical causes of virtual sovereignty, digital platforms gain infrastructural power related to critical Internet technologies by developing and controlling the hardware and software of the digital stack. The opacity and amorphous nature of the digital stack hinders state censorship, leading to the emergence of network-based “virtual sovereignty” (Hilferding, 1994).

In terms of the practical effectiveness of virtual sovereignty, Internet capital and digital platforms influence the thoughts and behaviors of economic entities and individuals, facilitating the cross-border flow of “fintech” and demonstrating a powerful force in leading the transformation of the digital economy. However, virtual sovereignty also faces legitimacy issues, such as whether the “virtual sovereignty” developed by Internet capital and digital platforms possesses authority, rights or legitimacy similar to national sovereignty. While Internet capital and digital platforms gain the capability to extract digital resources and lead innovative transformations, the “virtual sovereignty” of the digital stack they create sometimes conflicts with the “territory-centered autonomy” of sovereign nations. This is evident in issues like the lack of necessary accountability and transparency in private Internet capital's financing and control of digital platforms, which sometimes disregard national interests.

Digital platforms leverage smart devices and social media to shape individuals' perceptions, emotions and behaviors, maintaining their “extractive power” over digital resources. However, they do not always gain consumer acknowledgment regarding authority and legitimacy. For example, when most consumers visit digital platforms, they can agree to stringent terms for products and services with just one click, often without realizing what they have consented to. In contrast, legitimately exercising “sovereign” power requires citizens not only to give their consent but also to prove that they have done so. The moral force of consent depends to some extent on its publicity; the same is true for authorization (Lazar, 2020).

Without procedural legitimacy and security, it is not easy to establish a contract between virtual sovereignty and citizens or consumers. Commercial agreements between digital platforms and individual consumers cannot always ensure legitimacy, and the services provided by digital platforms are often characterized by a lack of transparency, competition, or accountability (Kelton et al., 2022). The virtual sovereignty of Internet capital also gives rise to geopolitical concerns. The commercial expansion of digital platforms based on virtual sovereignty may, objectively, allow foreign strategic competitors to exert negative influence through platforms. For example, driven by commercial motives, platforms may buy and sell technology and data with companies in the global supply chain; however, these companies and their home countries might have strategic competitive relationships with the platforms' home countries. Moreover, digital platforms exercise power over digital infrastructure by accumulating and monopolizing real-time cloud-stored big data, sometimes contravening traditional geopolitical norms. When these platforms evade state oversight under the guise of protecting user rights, some strategic competitors exploit these platforms to pursue adversarial strategic interests and some hostile actors weaponize social media, thereby triggering national security risks. Given that hostile actors challenge the legitimacy and resilience of state power, it is necessary to design better institutional arrangements to constrain the expansion of digital platforms in virtual spaces (Kelton et al., 2022).

Chinese Internet capital exhibits the typical characteristics of globalization as general Internet capital. As the Internet traffic dividend has gradually faded in China, major Chinese Internet companies like ByteDance, Alibaba, Pinduoduo and Tencent have expanded into the international market, leveraging brands including TikTok, AliExpress, Temu and Shopee, along with emerging cross-border e-commerce platforms like SHEIN, and have established comprehensive overseas cross-border supply chain service platforms. Chinese platform companies have made impressive strides in various sectors, including short videos, live streaming, gaming, ride-hailing and social entertainment, on the international stage –Chinese apps have reached the top five in over 90% of countries and regions. In recent years, these platform companies have continually advanced technological and product innovation, shifting from exporting products and capital to exporting technology and business models. Chinese cloud giants like Alibaba Cloud, Huawei Cloud and Tencent Cloud have expanded overseas since 2015 and were ranked among the top five globally by 2023. Their introduction of large language models (LLM) has further enhanced their international competitiveness.

However, the globalization of Chinese Internet capital also faces increasingly tight entry restrictions, security reviews and regulatory constraints. Platform companies encounter compliance, localization and product capability challenges when expanding into overseas markets. Unlike the US Internet giants prioritizing vertical deepening innovation, large-scale Chinese Internet capital and super platforms demonstrate a more pronounced inclination toward cross-sector expansion. They are keen on horizontal expansion at the terminal end and aim for user monopoly, seeking traffic monetization or cashing out through IPOs of invested companies. Their sphere of influence spans retail, healthcare, consumer finance, online payments, transportation, housing, media, tourism, business services and logistics (He et al., 2022). Internet capital has a broad reach and powerful control. Without proper regulation and clear rules and boundaries, its unchecked expansion and “wild growth” could lead to monopoly infringement and disruption of order. It might even trigger financial risks, digital security issues and ideological conflicts. In the past, some Internet capital ventures have shown tendencies toward excessive expansion in sectors like finance and insurance, education and training, cultural and entertainment and healthcare, which even led to financial crimes such as illegal fundraising and money laundering. The cross-sector expansion or boundless penetration of super platforms can result in algorithmic dominance and digital control over the economic ecosystem and the mass society, causing privacy violations, information leaks and data security risks. Moreover, it hinders independent vertical innovation.

As key technological entities in social governance and ideological leadership in the digital age, Internet capital and platforms represent significant market forces for a country's participation in the international digital competition and the shaping of digital rules. Regulating and guiding these entities are crucial for upholding ideological positions, maintaining digital sovereignty security and building a competitive edge in the digital realm. On the one hand, applying digital intelligence technologies drives governance reform. Internet platforms, serving as important channels for the public to express their demands and participate in governance, have become the battleground for public opinion and the struggle for discourse power among various social strata and interest groups. As the founders, technicians and operators of digital platforms, Internet capital and platform companies are expected to shoulder the responsibility and mission of monitoring public sentiment and safeguarding ideological security. Any deviation from the correct political direction and legal path could threaten national development and security by distorting governance and causing ideological deviations. On the other hand, if Chinese Internet capital becomes mired in chaotic expansion, inefficient growth and cutthroat competition and fails to develop core competencies in “bottleneck” technologies and digital infrastructure, it will struggle to achieve a strategic advantage over foreign platforms. This would hinder its ability to support China's voice on the world stage through international communication platforms, leaving the country vulnerable to the impact and infiltration of foreign Internet capital in the domestic market. Consequently, ensuring Chinese citizens' digital welfare and digital sovereignty would be challenging. For instance, if critical digital infrastructure like mobile payments and data resource pools were controlled by foreign capital, it would become a Sword of Damocles hanging over the digital operations of national production and the daily life of citizens.

To accurately understand and grasp Internet capital's characteristics and behavioral patterns is crucial for maximizing its positive impact and controlling its negative effects within the socialist market economy framework. This will ensure that Internet capital becomes a key element and driving force in accelerating the development of new productive forces and advancing high-quality growth. To this end, it is essential to navigate the dialectical relationship between the development and regulation of Internet capital, which involves guidance and regulation, as well as support and incentives, to establish new drivers for innovative development and a new order for the healthy growth of Internet capital, shaping a new landscape for the development of China's digital and intelligent economy ^[7]. The corresponding strategies of China can be interpreted as follows:

First, highlight the key role of Internet capital in accelerating the development of new productive forces, promoting high-quality development and shaping new international competitive advantages from the mindset perspective. Unwaveringly encourage, support and guide the innovative development of Internet capital and the digital and intelligent economy, unleashing its potential to drive the construction of digital infrastructure and the innovative transformation of the national economy. As a highly creative and cohesive factor of production and an innovative and dominant form of emerging capital, Internet capital not only performs the typical functions of capital in resource allocation, economic development, common prosperity, social governance, national security and even enhancing international competitiveness but also plays a critical role in the emergence and development of new types of productive forces. The new productive forces in the era of digital intelligence are advanced productive forces that emerge from revolutionary breakthroughs in digital intelligence technologies and their commercial applications, the innovative allocation of data-driven elements and the digital and intelligent transformation and upgrading of industries, characterized by the rapid integration of innovation chains and industrial chains, where continuously evolving digital intelligence innovations give rise to new industries, new models and new drivers of growth, thereby accelerating the development of a modern industrial system. As a representative of high-tech capital, Internet capital serves as the primary market force driving breakthroughs in digital intelligence technologies and their commercial applications, as well as the innovative allocation of emerging elements like data and industries' digital and intelligent transformation. The focus of great power competition, particularly between China and the United States, has shifted toward artificial intelligence and the intelligent economy. The success in this competition is determined by the innovative capabilities of Internet capital and platform enterprises, as well as the international competitiveness of the digital and intelligent industry clusters they establish. Encouraging and supporting the innovative development of Internet capital and nurturing more top-tier global tech platform enterprises are essential requirements and fundamental approaches to winning the race in artificial intelligence and building new national competitive advantages.

Second, in terms of the development focus, fully leverage the resource allocation capabilities, innovation leadership and welfare creation effects of Internet capital. Maximize the role of Internet capital in the “integrated allocation” of social innovation resources and the “seamless integration” in the national economic circulation, accelerating technological and industrial transformation toward informatization, digitalization and intelligentization, and upgrading traditional industries and developing advanced manufacturing through industrial Internet platforms to guide the digital transformation and upgrading of physical enterprises. Furthermore, harness the role of Internet capital in driving innovation and entrepreneurship, boosting employment and consumption, influencing reform and opening up, its resilience against risks, its international competitiveness, as well as its empowering effect on the modernization of governance. It is crucial to leverage the welfare-creation effects of Internet capital to meet people's needs for a better life in the digital era; support platform enterprises in the consumer sector to tap into market potential and increase the supply of high-quality products and services and enhance educational support for low-skilled workers, promote widespread access to information services and reduce costs for applications to enable ordinary people to access, afford and effectively use digital services, thereby increasing their sense of fulfillment in sharing the digital wealth.

Third, ensure equal treatment for all types of capital and market entities, including private Internet capital and platform enterprises, regarding institutions and legislation to create a more favorable market and legal environment for Internet technology companies to enhance innovative research and development and sustainable investment and operations. Continually improve and implement the “Two Unwaverings” principle in the digital and intelligent industries and platform economy to promote entrepreneurial spirit and stimulate the motivation and innovative vitality of Internet capital and platform enterprises. Establish and improve the market institutional framework for factors of production, including capital and data, enhance the property rights protection system for non-state Internet capital and platform enterprises and implement a fair competition review system to facilitate the construction of a unified national market for factors, such as capital and data. Improve the legal system for the development of Internet capital and accelerating legislation on the digital economy and artificial intelligence to form a comprehensive, logically coherent and well-structured governance framework and rule system, thereby providing a solid legal foundation that stabilizes expectations and benefits the long-term development of Internet capital and platforms. Furthermore, fully promote institutional openness and continuously facilitate investment to attract more high-level foreign investment and high-tech enterprises to invest and operate in China with a dynamic and predictable high-quality market environment. Actively participate in the formulation of international digital economy rules and foster international technology exchanges and R&D cooperation, supporting Chinese Internet technology capital and platforms to go global. Encouraging Internet platforms to innovate and accelerating the development of new productive forces requires the establishment of new production relations adaptable to these changes. Therefore, top-level design must be improved, economic and technological system reforms deepened and mechanisms for talent development and incentives, as well as for the participation of new factors in distribution, optimized to facilitate the smooth flow of various advanced and high-quality factors toward the development of new productive forces.

Fourth, enhance the alignment of values in policies and public opinion to support the innovative development of Internet capital, thereby boosting confidence and investment expectations in this sector. Unwaveringly encourage, support and guide the innovative development of Internet capital and enhance the performance and strength of platform enterprises as a representative and practical way to uphold the “Two Unwaverings” principle, stabilize policy expectations and the development confidence of all types of non-public capital, including Internet capital and unleash the innovative potential and creative energy of various investment and business entities in the digital and intelligent economy. Focus on a goal-oriented approach towards the innovative development of Internet capital, ensuring coordination and constructive collaboration across fiscal, monetary, employment, industrial, regional, technological and environmental policies and integrate non-economic policies into the policy alignment evaluation and strengthening policy coherence to ensure aligned and collective efforts. Address development bottlenecks and policy needs of Internet capital and platform enterprises by enhancing services and support in expanding market access, optimizing fair competition environments, facilitating the flow of innovation elements, etc. and implementing key measures in resource acquisition, fair enforcement, rights protection, etc. Continuously foster a market-oriented, law-based and internationalized first-class business environment, reinforcing the confidence of high-quality foreign investment and high-tech enterprises in their development in China while enhancing the quality and level of trade and investment cooperation. Strengthen positive publicity and public opinion guidance on the development prospects and policy expectations of Internet capital and platform economy development and promote an optimistic view of China's economic future. Firmly resist malicious sensationalization and attacks that misinterpret the efforts to regulate and guide capital development as an attempt to curb or suppress private capital to consolidate and enhance the confidence and expectations of Internet capital and other tech capital development.

Correctly understand and balance the relationship between encouraging the development of private capital and preventing disorderly expansion of capital. It is important to combine facilitation with regulation, implement targeted policies based on categories and balance development with safety, efficiency with fairness, dynamism with order and domestic with international contexts. Optimize the guidelines and policies for regulating and guiding the healthy development of capital, ensuring it is orderly and integrated into the overarching goals of high-quality development and common prosperity. On the one hand, encourage innovation and technology breakthroughs in Internet capital and platform enterprises and create an institutional environment where various types of capital can thrive, contributing to the development of new productive forces and the enhancement of national well-being. Promote the global expansion of Chinese Internet capital and platforms to strengthen their international competitiveness. On the other hand, regulate and govern platform monopolies and the disorderly expansion of Internet capital according to the law. Continuously improve laws and regulations related to the digital economy and artificial intelligence, establishing a legal framework for platform antitrust and restricting the disorderly expansion of Internet capital. Establish a “traffic light” system for Internet capital, develop a comprehensive, logically sound and well-structured regulatory framework for platform capital and foster a new order in platform economy development characterized by fair competition, innovative growth, open sharing, security and harmony. Establish a comprehensive governance system and a new regulatory mechanism for Internet capital to enhance the precision and effectiveness of governance and regulation. Rigorously guard against the disorderly expansion of capital, monopoly disorder, technological suppression, the misuse of rule-based algorithms and system closure to ensure, respectively, economic and social security, fair market competition, innovative industry development, the legitimate rights and interests of all parties and an open and shared ecosystem.

Establish a negative list for Internet capital access in accordance with the law, with a clear definition of the sectors that are prohibited and those that are encouraged for entry, channeling investment towards high-tech and digital frontier domains, fostering advancements in digital technology and addressing critical technological bottlenecks. Support state capital in investing in foundational and strategic digital economy sectors to participate in significant digital and intelligent technology innovations and the development of core digital infrastructure, thereby enhancing the role of state-owned digital platforms in leading innovation and maintaining digital security. Identify and regulate platform capital merger and acquisition activities based on differences in acquisition methods, user scale, investment amounts and other factors, and combat malicious acquisitions of small and medium-sized innovative enterprises by platform capital. Guard against Internet capital using monopolistic power, big data and algorithms for financial speculation that endangers financial security. Enhance the foresight and agility of systemic risk management to ensure the early detection, handling and resolution of potential threats. Strengthen anti-corruption efforts in the realm of Internet capital and crack down hard on profit-driven activities of Internet capital leveraging power, with a focus on investigating and addressing the corruption behind the disorderly expansion of platform capital and platform monopolies. Give high priority to national digital security, implement the data security accountability system and fortify cyber defense lines. Ensure that Internet platforms and digital and intelligent technologies are independently controllable in areas critical to national security, the lifeblood of the national economy and the people's livelihood.

Ensure the implementation of a distribution system that combines distribution according to labor and distribution according to production factors. Fully utilize the role of Internet capital in driving innovation, entrepreneurship and employment and in activating the participation of factors in the production and distribution cycle while preventing Internet capital from infringing upon the distribution rights of labor, knowledge and other factors, ensuring that the benefits of common prosperity are distributed equitably. Improve legislation on labor protection and digital safety for platform enterprises. Clearly define the labor protection responsibilities of platform enterprises and urge them to take responsibility for product quality and food safety. Strengthen the data security responsibilities of platform enterprises to safeguard users' data rights and privacy. Enhance the “whole-chain” regulatory framework, strengthen the professional regulatory capabilities for antitrust oversight of platforms and improve the specialization in regulating platform financial activities to prevent platform enterprises from abusing market dominance or exploiting data and algorithms to the detriment of consumer rights. Improve the welfare protection system for gig economy workers and leverage public oversight to create a collaborative governance effort.