As President Xi Jinping targets China’s massive tech giants, the big question now is how he’ll get them to share key data as part of a sweeping plan to transform the world’s second-biggest economy.

Until recently, China’s megafirms like Jack Ma’s Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have operated in a similar way to U.S. counterparts Facebook Inc. and Alphabet Inc., harnessing user data to refine an expanding array of digital services. Since more data leads to better products, the tech platforms often become natural monopolies — giving them enormous wealth and power that also opens the door for abuses.

More U.S. lawmakers have started calling for legislation to break up the American firms, but so far those efforts have failed to gain much traction. Europe has focused mainly on giving users more control over data and levying hefty antitrust fines against companies like Google.

China, by…

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