Profits are expected to fall for China's IT behemoths.

Technology companies are facing slower growth as Beijing reasserts control over its once-freewheeling internet sector.

Tencent and Alibaba, two of China's largest publicly traded companies, are anticipated to announce lower profits and slower revenue growth in the July-September quarter, harmed by a year-long government crackdown that has upended the country's technology industry.

Beijing has reasserted control over its once-liberal internet sector, fining well-known companies for what were formerly considered normal market activities and creating new rules to overhaul how they compete and engage customers.

In a report last month, KGI Asia analysts stated, "We expect the financial effect of regulatory obstacles in China will be reflected in (third quarter) results and (fourth quarter) forecasts."

According to Refinitiv data, Tencent Holdings Ltd, the country's largest company by market value and the first Big Tech company to announce earnings on Wednesday, is projected to disclose a 12 percent reduction in quarterly profit, the first dip in two years.

After the government set new limits on the amount of time minors can spend playing video games, the gaming giant's revenue is predicted to rise 16.4%, the slowest pace since the first quarter of 2019. Since August, China's gaming authority has not approved any new games.

Tencent was also forbidden from signing exclusive music deals in China throughout the quarter, claiming anti-competitive concerns.

Alibaba, the e-commerce behemoth that became China's first regulatory target late last year, is anticipated to report a 12 percent drop in quarterly profit. Revenue is expected to jump 32 percent, the weakest increase in a year.

Alibaba reported its first quarterly operational loss since going public in 2014, following a record $2.8 billion penalties.

JD.com Inc, a smaller competitor, is anticipated to report a 71% drop in earnings and the weakest revenue rise in six quarters.

Retail sales in China are slowing as a result of COVID-19 restrictions and recent power outages, according to KGI Asia analysts.