Alibaba Group Holding Ltd. is headquartered in Hangzhou, China.
Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
China has begun an investigation into alleged monopolistic practices in Alibaba Group Holding Ltd. and convened the affiliate Ant Group Co. at a summit on financial regulations, stepping up control over the twin pillars of billionaire Jack Ma’s internet empire.
The state administration for market regulation is investigating Alibaba, the most important antitrust guard said in a statement, without further details. Regulators, including the central bank and the banking watchdog, will do so separately invite your Ant affiliate to a meeting to drive ever tighter financial regulations, which now poses a threat to the growth of the world’s largest online financial services firm. Ant stated in a statement from its official WeChat account that it will study and comply with all requirements.
Once hailed as factors of economic prosperity and symbols of the country’s technological prowess, Alibaba and their rivals Tencent Holdings Ltd. is facing 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 up to 2.7% lower trading earnings in Tokyo. Alibaba’s Hong Kong shares slipped 3.4%.
Investors are divided over how far Beijing will go after Alibaba – Asia’s largest corporation after Tencent – and its compatriots as the Xi Jinping government prepares to launch a series of new antitrust regulations. The country’s leaders have said little about how harshly they intend to reduce or why they have decided to act now. The draft rules launched in November give the government an unusually wide latitude to control technology entrepreneurs, such as Ma, who until recently enjoyed an unusual freedom to expand their empires.
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The flamboyant co-founder Alibaba has almost disappeared from public view since Ant’s initial public offering was discouraged. In early December, with his empire under regulatory control, the man most closely identified with China Inc.’s meteoric rise. was advised by the government to stay in the country, said a person familiar with the matter. 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 investments that comprises the vast majority of the country’s startups in arenas from AI to digital finance. . Their patronage also cared for a new generation of titans, including the food and travel giant Meituan and Didi Chuxing – China Uber. Those who thrive outside their aura, the greatest being the owner of TikTok ByteDance Ltd., are rare.
Antitrust rules now threaten to overcome that status quo with a range of potential outcomes, from a benign scenario of fines to a breakup of industry leaders. Various agencies in Beijing seem to be coordinating their efforts – a bad sign for the internet sector.
“Of all the regulatory hurdles, this is the biggest remote,” said Mark Tanner, general manager of China Skinny Consulting in Shanghai. “China has made a lot of bureaucracy more efficient, so it’s easier for different regulators to work together now.”
Read more: The $ 290 billion drop, China Tech Investors Mull Nightmare Scenarios
China’s Internet leaders
Tencent, Alibaba and Ant Group have invested in a wide range of Chinese start-ups, ranging from social media to online commerce
Sources: Bloomberg, CB Insights, Crunchbase
(Updates with Ant’s answer in the second paragraph)