China orders Ant to ‘return to its origins of payment’

• Chinese regulators have ordered Ant to review its business and “go back to its payment origins” as the nation continues to crack down on the fintech company.
• Officials in a meeting over the weekend accused the company of “turning a blind eye” to regulatory requirements.
• The news comes after China withdrew Ant’s $ 37 billion initial public offering in early November, after founder Jack Ma publicly dismissed the nation’s regulatory system as outdated.
• China’s new order also comes a week after it announced that it was launching an antitrust investigation into Alibaba, which Ma also founded, over alleged monopolistic business practices.
• The move signals China’s ongoing mission to reign in tech companies to prevent them from becoming too powerful.
• Visit the Business Insider home page for more stories.

China ordered Ant Group to change parts of its business and downsize to its origins as a payment service as the nation’s government continues to control the fintech giant.

Regulators met with company executives over the weekend, The Telegraph reported, and told Ant to rectify its “illegal” financial services, such as its lucrative online credit business.

Officials reportedly said Ant has “defied” regulations and engaged in anti-competitive business practices, as well as harmed consumer rights, according to a CNN report.

The Chinese authorities did not explicitly tell Ant to split his company or divest itself of any of its operations, but they did instruct Ant to “understand the need to review his business,” according to the Telegraph. China also ordered Ant to “return to its origins of payment.”

Pan Gongsheng, a deputy governor of the Chinese central bank, said Ant had become “indifferent” to China’s requirements, according to The Telegraph.

When asked for comment, Ant Group pointed to a company blog post to Business Insider in which Ant said it did indeed meet with regulators on Sunday.

“Under the guidance of regulators, Ant Group will establish a rectification working group and fully implement the requirements raised at the meeting to align the operation and development of our finance-related businesses,” Ant said in the publication.

Ant started as the parent company of Alipay, a digital payment processor for Chinese e-commerce giant Alibaba. Ant later parted ways with Alibaba and became a powerful industry player in his own right, becoming a financial technology giant that offered a variety of financial services including its original payment platform, as well as insurance offerings and loan options. Chinese billionaire Jack Ma is the founder of both companies.

Read more: China reportedly demanded that big Chinese tech companies like Alibaba process US data for the nation’s top spies on demand.

News of the order from China comes after news broke that Ma offered to hand over parts of Ant Group to the Chinese government at a Nov.2 meeting, according to a Wall Street Journal report last week.

“It can take any of the platforms Ant has, as long as the country needs it,” Ma told regulators at the November meeting, according to the Journal.

Ma made that offer after he previously publicly disparaged the nation’s financial regulatory system. China then introduced new microcredit rules that directly impacted Ant as it prepared for what was to be a record $ 37 billion IPO on November 5.

But the offer failed to convince China and the authorities withdrew the IPO.

Read more: Ant was heading for a record $ 37 billion initial public offering before his dreams were thwarted by Chinese regulators, and experts say he may no longer be the acclaimed fintech disruptor that the banking sector was waiting for.

News of China’s crackdown on Ant also comes days after the nation announced that it was launching an antitrust investigation against Alibaba for alleged monopoly practices.

China announced new rules in early November that could prevent internet companies from having too much power in the market. The regulations are designed to set stricter anti-competitive behavior guidelines and prevent certain practices, such as companies coming together to crush smaller competitors.

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Alibaba CEO Daniel Zhang called the new rules “timely and necessary,” comments that stand in stark contrast to those made by Ma in October when he dismissed China’s regulatory rules as outdated.