Singles Day, a Black Friday-like shopping festival dreamed up by large retailers, is normally boom time for China’s major online platforms. And indeed Alibaba, which this year started its 11.11 event back on Nov. 1, claims a record $56 billion (RMB372 billion) of business, and sales coming in at up to 583,000 orders per second.

But China’s tech investors are doing anything but cheering. That’s because the mainland government Tuesday said that it is in the process of issuing regulations to rein in the power of tech giants such as Alibaba, Tencent, JD.Com and Meituan-Dianping.

The State Administration for Market Regulation released draft rules that, for the first time, clearly defines anti-competitive behavior. They appear to cover areas including pricing, payment methods, and use of data to target shoppers.

That appears to run directly contrary to the business models of China’s consumer-facing tech giants, who have built huge and diverse empires spanning e-commerce, payment systems, delivery, and dematerialized services such as gaming and video entertainment. The ecosystems are often supported by so-called super apps that aim to keep users engaged and within the vast walled garden for as long as possible.

It has long been suggested that Chinese customers are used to being spied upon by their government and are therefore far less worried than Western consumers about data privacy issues. The convenience and range of services available through each of the major platforms has allowed everyday Chinese society to become more technologically advanced that many Western countries.

It has also allowed the Middle Kingdom tech companies to account for a far larger portion of the Chinese economy than their equivalents in North America and Europe. That may be the bigger worry for the Chinese government.

Even though they already largely cooperate with the central government on matters such as censorship, China’s tech companies are now so large and multi-tentacled that they have the potential to represent another source of power and organization in Chinese society other than the Communist Party-led government.

The draft regulations, which are open for public comment until the end of November, were announced exactly a week after China’s securities regulators effectively halted the IPO in Shanghai and Hong Kong of Alibaba-affiliate Ant Group, two days before share trading was to have begun. The company is a new age finance industry giant that would have had an initial market capitalization of $310 billion.

Tuesday’s draft regulations may also limit variable interest entities (VIEs), special purpose companies which allow Chinese companies to raise finance and list shares abroad. If these are indeed to be unwound there could be huge upheaval for corporations and in financial markets.

While some commentators have seen the Ant Group debacle in personal terms, a second slap-down for Alibaba founder Jack Ma, the broader message may be that politics always trumps economics: No company is too big to be punished. And no power, organization or personality can be bigger than the Party.

Those reminders bring multiple potential complications and contradictions. The firms now being targeted are the same fast-evolving digital companies that are driving China’s post-COVID recovery. Reacting to U.S. pressure, the government has set out further plans to become more self-sufficient in technology, a challenge that has willingly been taken up by private sector. Are they now to be stopped? And PRC authorities dream of denting the U.S. dollar’s role as a reserve currency, and to make the Chinese currency more a medium of international trade than its current low level. Hurting its innovators hinders that.

Alibaba executives shrugged off the Ant Group shambles in their financial results presentation on Thursday last week. They have yet to react publicly to the draft regulations. Alibaba’s fiercest competitor Tencent will have its chance to form a response when it announced its third quarter figures on Thursday.

Investors have already demonstrated their fears by pulling the shares of the biggest tech firms off their recently-achieved all-time highs. Both Alibaba and Tencent fell by more than 7% on Wednesday. At HK$248.40 on Wednesday, Alibaba shares are 13% lower than their close on Friday Oct. 30. Tencent is 7% down on the month at HK$551 per share.