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The headquarters of Alibaba Group Holding Ltd. in Hangzhou, China.
Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
China launched an investigation into alleged monopolistic practices in Alibaba Group Holding Ltd. and affiliate Ant Group Co. convened 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 without further details. Regulators, including the central bank and banking watchdog, calling affiliate Ant to a meeting aimed at pushing increasingly stringent financial regulations, which now pose a threat to the growth of the world’s largest online financial services company. Ant He 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 such as Tencent Holdings Ltd. is facing increasing pressure from regulators after amassing hundreds of millions of users and gaining influence in almost every aspect of daily life in China. Share on SoftBank Group Corp., Alibaba’s largest shareholder, erased earnings to trade up to 2.7% less in Tokyo. Alibaba shares in Hong Kong slipped 3.4%.
Investors are divided over how far 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. Draft rules released 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.
Read more: Jack Ma shuts up after Ant Group’s spectacular destruction
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 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 the country’s startups. in fields from artificial intelligence to digital. Finance. His patronage has also groomed a new generation of titans, including the food and travel giant Meituan and Didi Chuxing – China Uber. Those who thrive outside of his aura, the biggest is the owner of TikTok. ByteDance Ltd., are rare.
Antitrust rules now threaten to upset that status quo with a variety of potential outcomes, from a benign scenario of fines to a breaking off from industry leaders. The various agencies in Beijing now appear to be coordinating their efforts, a bad sign for the Internet sector.
“Of all the regulatory hurdles, this is by far the biggest,” said Mark Tanner, managing director of Shanghai-based consultancy China Skinny. “China has simplified much of the bureaucracy, so it is now easier for the different regulatory bodies to work together.”
Read more: At $ 290 Billion, China’s Tech Investors Ponder Nightmare Scenarios
China’s Internet Rulers
Tencent, Alibaba and Ant Group have invested in a wide range of Chinese startups spanning areas from social media to online commerce.
Sources: Bloomberg, CB Insights, Crunchbase
(Updates with Ant’s answer from the second paragraph)
