A skirmish between fintech pioneer Jack Ma and Chinese authorities is reportedly leading to changes at Ant Group.
Ant Group is proposing a structure that would still see it operate in financial services beyond payments, though its activities would be more tightly regulated and subject to more capital restrictions, «Bloomberg» (behind paywall) reported on Tuesday, citing people familiar with the situation.
The move represents the latest chapter in a showdown between Jack Ma, founder of Ant as well as Alibaba, and the Chinese government. The conflict is being widely watched outside of China for Ant's status as a preeminent financial technology firm – and a litmus test of how governments handle the dominance of big tech.
Holding Plan
On Sunday, Chinese regulators instructed Ant Group to separate its activities to ensure sufficient capital and data privacy protection. Ant is now reportedly mulling setting up a holding company to include wealth management services, consumer lending, insurance, payments, and Mybank, an online lender in which Ant is the largest shareholder.
The dispute has highly personal implications for Ma, who is China's second-wealthiest individual: Beijing has come at Ma directly, advising him not to leave the country. Ma was last seen publicly in October when he called out mainland authorities for outdated regulations at a summit in Shanghai. His remarks are believed to have led China to stop Ant's IPO, which would have been the world's biggest listing.
Tech Sell-Off
In addition to accusations against Ant over issues relating to governance, compliance and regulatory arbitrage, regulators have also come after Alibaba for its alleged monopolistic practices. The company has grown from a digital payments platform to a sprawling financial empire that operates China's most popular digital wallet.
Alibaba and its three largest rivals — Tencent, food delivery giant Meituan and JD.com — have shed nearly $200 billion in Hong Kong over two sessions since Thursday, when regulators revealed an investigation into alleged monopolistic practices at Alibaba.
