The headquarters of Alibaba Group Holding Ltd. in Hangzhou, China.
Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
China initiated an investigation into alleged monopolistic practices Alibaba Group Holding Ltd. and the affiliate company called Ant Group Co. for a high-level meeting on financial regulation that escalated the investigation into the two pillars of billionaire Jack Ma’s internet empire.
The state’s market regulation administration is investigating Alibaba, the chief antitrust watchdog said in a statement without further details. Regulatory agencies, including the central bank and the bank watchdog, will do this separately called on partner Ant for a meeting designed to introduce increasingly stringent financial regulations that now threaten the growth of the world’s largest online financial services company. Ant said in a statement on its official WeChat account that it will study and comply with all requirements.
Once hailed as a driver of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals such as Tencent Holdings Ltd. is facing increasing pressure from regulators after it has amassed hundreds of millions of users and has taken on an impact on almost every aspect of daily life in China. Classifies SoftBank Group Corp., Alibaba’s largest shareholder, managed to squeeze out gains to trade as much as 2.7% lower in Tokyo. Alibaba’s Hong Kong stock slipped 3.4%.
Investors are divided on the extent to which Beijing will go after Alibaba – Asia’s largest company after Tencent – and its countrymen, as Xi Jinping’s government prepares to introduce a series of new antimonopoly rules. The country’s leaders have said little about how hard they intend to fight or why they have decided to take action now. Draft rules released in November give the government an unusually wide margin of maneuver to rein in tech entrepreneurs like Ma, who until recently enjoyed an unusual amount of freedom to expand their empire.
Read more: Jack Ma goes quiet after the spectacular demise of Ant Group
Alibaba’s flamboyant co-founder has all but disappeared from sight since Ant’s IPO went off the rails. In early December, with his empire overseen by regulatory agencies, the man most identified with the rapid rise of China Inc. advised by the government to stay in the country, a person familiar with the matter said. Alibaba representatives were not immediately available for comment.
The country’s internet ecosystem – long protected from competition by Google and Facebook – is dominated by two companies, Alibaba and Tencent, through a labyrinthine network of investments that spans the vast majority of the country’s startups in arenas from AI to digital. finances. Their protection has also spawned a new generation of titans, including food and travel giant Meituan and Didi Chuxing … of China Uber. Those who thrive outside of their aura, the largest of which is TikTok owner ByteDance Ltd., are rare.
The anti-monopoly rules now threaten to disrupt that status quo with a range of possible consequences, from a benign scenario of fines to a Break up from industry leaders. Beijing’s various agencies now appear to be coordinating their efforts – a bad sign for the internet industry.
“Of all the regulatory hurdles, this is by far the biggest,” said Mark Tanner, director of Shanghai-based consultancy China Skinny. “China has streamlined a lot of the bureaucracy so that the various regulators can now work together more easily.”
Read more: $ 290 Billion Down, China Tech Investors Mull Nightmare Scenarios
China’s internet rulers
Tencent, Alibaba and Ant Group have invested in a wide variety of Chinese startups ranging from social media to online trading
Sources: Bloomberg, CB Insights, Crunchbase
(Updates with Ant’s answer from the second paragraph)