What happened Chinese internet stocks were hit hard on Tuesday. By the close of trading in the U.S., shares of Alibaba Group (NYSE: BABA), Tencent Holdings (OTC: TCEHY), and JD.com (NASDAQ: JD) were down 8.3%, 6.1%, and 5.6%, respectively. So what China's government is taking steps to reign in the power of its largest internet companies. China's State Administration for Market Regulation released a draft of rules designed to inhibit the ability of internet platforms to engage in monopolistic behavior. The rules are expected to apply to online retail marketplaces operated by the likes of Alibaba and JD.com, as well as digital payment platforms such as Tencent's WeChat. Chinese internet stocks sank on regulatory concerns. Image source: Getty Images. Now what China has long sought to support the growth of its homegrown internet leaders, so as to boost their ability to compete with their international rivals. However, in the process, companies like Alibaba and Tencent have become dominant within China. The Chinese government now appears to be turning its attention to fostering domestic competition. Thus, Alibaba, Tencent, and JD.com could all face greater opposition as they look to expand within China in the coming years. Investors now must factor these risks into their outlooks for China's internet leaders. Their stock prices, in turn, are being adjusted downward by the market. 10 stocks we like better than Tencent HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Tencent Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of October 20, 2020 Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., JD.com, and Tencent Holdings. The Motley Fool has a disclosure policy.Source