China wants Jack Ma’s Ant Group to “return to its origins” as a digital payment provider

Days after news broke that Alibaba is being investigated for alleged “monopolistic conduct”, China’s regulators have ordered Jack Ma-founded Alibaba affiliate Ant Group to downsize its business. According to Pan Gongsheng, deputy governor of China’s central bank, some of Ant Groups’s wide range of services—including savings accounts, credit services, and wealth management—are “illegal”.

At the start, Ant Group began life as Alipay. It eventually grew to become the largest digital payment platform in China, before expanding its services as mentioned above. Now, regulators are calling for Ant Group to downsize its business and “return to its origins” as a digital payment provider—the original service that Alipay provided.

On China’s central bank’s website, the deputy governor said that Ant Group will be required to take a number of steps which prohibt unfair competition, improve corporate governance, and other steps to bring the group’s dealings in accordance with laws in China. Ant Group, for their part, have said that a “rectification working group” will be set up to ensure that requirements are fully met.

“We will enlarge the scope and magnitude of opening up for win-win collaboration, review and rectify our work in consumer rights protection, and comprehensively improve our business compliance and sense of social responsibility. Ant will make its rectification plan and working timetable in a timely manner and seek regulators’ guidance in the process.”

This comes on the back of other issues that Ant Group is facing. The group’s IPO in Hong Kong and China—originally expected to raise around USD 34 billion (~RM137 billion)—was suspended by regulators, just 36 hours before the listing was supposed to be opened. Given the timing of the decision, it seemed related to the blunt speech given by Jack Ma at the Bund Summit in Shanghai, where Ma called out “old-fashioned” financial regulations in the country.

As a result, Alibaba’s share price in Hong Kong trading dropped by 8 percent on Monday; as a whole, shares for the company have reduced in value by more than a quarter since 24 October 2020. Meanwhile, The Guardian reports that a combination of these measures have taken more than USD 10 billion (~RM40.5 billion) off Jack Ma’s personal fortune, which has dropped him down into second place in the list of China’s richest individuals.

He’s still worth an estimated USD 49 billion (~RM198.4 billion), but Tencent founder Pony Ma is now the richest man in China. And no, Jack Ma and Pony Ma are not related, as far as we know. Further implications of China’s crackdown on Ant Group are still unknown for now, with the group’s wide range of investments around the globe including Zomato, and even the Touch ‘n Go eWallet in Malaysia.

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