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BEIJING (BLOOMBERG) – China launched an investigation into alleged monopolistic practices at Alibaba Group Holding and convened affiliate Ant Group for a high-level meeting on financial regulations, intensifying scrutiny on the twin pillars of billionaire Jack Ma’s internet empire. .
The State Administration for Market Regulation is investigating Alibaba, the main antitrust watchdog said in a statement on Thursday (December 24) without further details. Regulators, including the central bank and banking watchdog, will separately convene affiliate Ant for a meeting aimed at pushing for increasingly stringent financial regulations, which now pose a threat to the growth of the online financial services company. biggest in the world. Ant said in a statement on his official WeChat account that he will study and meet all the requirements.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent Holdings face mounting pressure from regulators after amassing hundreds of millions of users and gaining influence in almost every aspect of life. daily in China.
Alibaba’s shares in Hong Kong fell as much as 7.7 percent to a five-month intraday low, while Tencent and internet services giant Meituan fell more than 1 percent. Shares of SoftBank Group Corp, Alibaba’s largest shareholder, erased earnings to trade as much as 2.7 percent lower in Tokyo.
Investors are divided over the extent to which Beijing will go after Alibaba, Asia’s largest corporation after Tencent, and its compatriots as Xi Jinping’s government prepares to implement a series of new antitrust regulations. The country’s leaders have said little about how harshly they plan to take drastic action or why they decided to act now. The draft rules published in November give the government unusually wide latitude to control tech entrepreneurs like Ma, who until recently enjoyed an unusual amount of freedom to expand their empires.
“It is clearly an escalation of coordinated efforts to control Jack Ma’s empire, symbolizing China’s new ‘too big to fail’ entities,” said Dong Ximiao, a researcher at the Zhongguancun Internet Finance Institute. “The Chinese authorities want to see a smaller, less dominant and more compliant company.”
Alibaba’s flamboyant co-founder has all but disappeared from public view since Ant’s IPO went off the rails. In early December, with his empire under regulatory scrutiny, the government advised the man most closely identified with the meteoric rise of China Inc 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 companies like Google and Facebook, is dominated by two companies, Alibaba and Tencent, through a labyrinthine investment network that encompasses the vast majority of startups in the world. country in fields from artificial intelligence to digital finance. His sponsorship has also groomed a new generation of titans, including travel and food giant Meituan and Didi Chuxing, China’s Uber. Those who thrive outside of his aura, the biggest being ByteDance, owner of TikTok, are rare.
Antitrust rules now threaten to upset that status quo with a variety of possible outcomes, from a benign scenario of fines to the dissolution of industry leaders. The various agencies in Beijing now appear to be coordinating their efforts, a bad sign for the Internet sector.
The People’s Daily, a spokesman for the Communist Party, warned on Thursday that fighting alleged monopolies was now a top priority. “Antitrust has become a pressing issue that concerns all matters,” he said in a comment that coincided with the announcement of the investigation. The “wild growth” in the markets must be stopped by law, he added.
The campaign against Alibaba and its peers accelerated in November, after Ma attacked Chinese regulators in a public speech for delaying times. Market supervisors subsequently suspended Ant’s IPO, the world’s largest at $ 35 billion (Singapore $ 46.6 billion), while the antitrust watchdog sent markets plummeting soon after with its bill. .
The chances that Ant can revive its massive stock listing next year look increasingly slim as China revises the rules governing the fintech industry, which in recent years has exploded as an alternative to financial technology. traditional state-backed loans.
China is said to have separately established a joint task force to oversee Ant, led by the Financial Stability and Development Committee, a regulator of the financial system, along with various departments of the central bank and other regulators. The group is in regular contact with Ant to collect data and other materials, studying its restructuring and drafting other rules for the fintech industry.
“China has simplified much of the bureaucracy, so it is now easier for the different regulatory bodies to work together,” said Mark Tanner, managing director of Shanghai-based consultancy China Skinny. “Of all the regulatory hurdles, this is by far the biggest.”
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