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The head office of Alibaba Group Holding Ltd. in Hangzhou, China.
Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
China launches investigation into alleged monopoly practices Alibaba Group Holding Ltd. and convened its subsidiary Ant Group Co. to a high-level meeting on financial regulation, stepping up scrutiny of the two pillars of billionaire Jack Ma’s internet empire.
The State Administration for Market Regulation is investigating Alibaba, the leading antitrust watchdog said in a statement without further details. Regulators, including the central bank and the banking watchdog, call affiliate Ant to a meeting to promote increasingly stringent financial regulations, which now threaten the growth of the world’s largest online financial services company. Ant said in a statement on his official WeChat account that he will investigate and comply with all requirements.
Once hailed as engines of economic prosperity and symbols of the country’s technological prowess, Alibaba and its rivals love Tencent Holdings Ltd. faces increasing pressure from regulators after accumulating hundreds of millions of users and gaining influence over almost every aspect of daily life in China. Shares in SoftBank Group Corp., Alibaba’s largest shareholder, wiped out the gains to negotiate up to 2.7% less in Tokyo. Hong Kong share of Alibaba slipped 3.4%.
Investors are divided over the extent to which Beijing will take on Alibaba – Asia’s largest company after Tencent – and its compatriots as Xi Jinping’s government prepares to put in place a slew of new anti-government regulations. monopoly. The country’s leaders have said little about how much they plan to crack down on them or why they have decided to act now. Draft rules released in November give the government unusually wide leeway to curb tech entrepreneurs like Ma who until recently enjoyed unusual freedom to expand their empires.
Read more: Jack Ma is silent after spectacular cancellation of Ant Group
The flamboyant Alibaba co-founder has all but disappeared from public view since Ant’s initial public offering derailed. In early December, with his empire undergoing regulatory scrutiny, the man most closely identified with China Inc.’s meteoric rise was invited 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 investment that encompasses the vast majority of the country’s startups in the arenas of the Digital AI. finance. Their patronage has also trained a new generation of titans, including food and travel giant Meituan and Didi Chuxing – China Uber. Those who thrive outside of their aura, the largest being the owner of TikTok ByteDance Ltd., are rare.
Anti-monopoly rules now threaten to upset this status quo with a range of potential results, from a mild scenario of fines to a to break up industry leaders. The various agencies in Beijing now appear to be coordinating their efforts – a bad sign for the internet industry.
“Of all the regulatory hurdles, this is by far the most important,” said Mark Tanner, managing director of Shanghai-based consultancy China Skinny. “China has streamlined a lot of the bureaucracy to make it easier for different regulators to work together now.”
Read more: Down $ 290 billion, Chinese tech investors lead to nightmare scenarios
China’s Internet rulers
Tencent, Alibaba and Ant Group have invested in a wide range of Chinese startups spanning fields from social media to e-commerce
Sources: Bloomberg, CB Insights, Crunchbase
(Updates with Ant’s response to the second paragraph)
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