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Days after news broke that Alibaba was being investigated for alleged “monopolistic conduct,” China’s regulators ordered Ant Group, an Alibaba subsidiary founded by Jack Ma, to reduce the size of its business. According to Pan Gongsheng, deputy governor of China’s central bank, some of the services in Ant Group’s wide range, including savings accounts, credit services and wealth management, are “illegal.”
In the beginning, Ant Group started life as Alipay. It eventually grew to become the largest digital payment platform in China, before expanding its services as mentioned above. Now regulators are asking Ant Group to downsize its business and “go back to its roots” as a provider of digital payments, the original service that Alipay provided.
On the website of China’s central bank, the lieutenant governor said that Ant Group will need to take a series of measures that prohibit unfair competition, improve corporate governance and other measures to make the group’s dealings in line with China’s laws. Ant Group, for its part, has said that a “rectification working group” will be established to ensure that the requirements are fully met.
“We will expand the scope and magnitude of openness to mutually beneficial collaboration, review and rectify our work in protecting consumer rights, and comprehensively improve our business compliance and sense of social responsibility. Ant will develop its rectification plan and work schedule in a timely manner and will seek guidance from regulators in the process. “
This is due to other issues faced by the Ant Group. The group’s IPO in Hong Kong and China, which was originally expected to raise around USD 34 billion (~ RM137 billion), was suspended by regulators, just 36 hours before the listing was supposed to open. Given the timing of the decision, it appeared to be related to Jack Ma’s hard-hitting speech at the Bund Summit in Shanghai, where Ma called financial regulations “outdated” in the country.
As a result, Alibaba’s Hong Kong share price fell 8 percent on Monday; As a whole, the company’s shares have decreased in value by more than a quarter since October 24, 2020. Meanwhile, The Guardian reports that a combination of these measures has taken more than USD 10 billion (~ RM40.5 billion) from Jack Ma’s personal fortune, placing him second on the list of the richest people in China.
It is still worth an estimated USD 49 billion (~ RM198.4 billion), but Tencent founder Pony Ma is now the richest man in China. And no, Jack Ma and Pony Ma are not related, as far as we know. Further implications of China’s crackdown on Ant Group are still unknown for now, with the group’s wide range of investments around the world, including Zomato, and even Touch ‘n Go eWallet in Malaysia.
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