China has started an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd (阿里巴巴) and summoned affiliate Ant Group Co (螞蟻集團) to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s (馬雲) Internet empire.
The probe, announced yesterday, marks the formal start of the Chinese Communist Party’s (CCP) crackdown on the crown jewel of Ma’s sprawling dominion, spanning everything from e-commerce to logistics and social media.
The pressure on Ma is central to a broader effort to rein in an increasingly influential Internet sphere: Draft anti-monopoly rules released last month gave the government unusually wide latitude to rein in entrepreneurs like Ma who until recently enjoyed unusual freedom to expand their realms.
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Once hailed as drivers of economic prosperity and symbols of the nation’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd (騰訊) face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
“It’s clearly an escalation of coordinated efforts to rein in Jack Ma’s empire, which symbolized China’s new ‘too-big-to-fail’ entities,” said Dong Ximiao (董希淼), a researcher at Zhongguancun Internet Finance Institute (中關村互聯網金融學院). “Chinese authorities want to see a smaller, less dominant and more compliant firm.”
China’s State Administration for Market Regulation is investigating Alibaba, the top antitrust watchdog said in a statement without further details.
Regulators including the central bank and banking watchdog are to separately summon affiliate Ant to a meeting intended to drive home increasingly stringent financial regulations, which now pose a threat to the growth of the world’s biggest online financial services firm.
Ant said in a statement on its official WeChat account it would study and comply with all requirements.
Ma, the flamboyant cofounder of Alibaba and Ant, has all but vanished from public view since Ant’s initial public offering (IPO) got derailed last month.
As of early this month, the man most closely identified with the meteoric rise of China Inc was advised by the government to stay in the country, a person familiar with the matter has said.
Ma is not on the verge of a personal downfall, those familiar with the situation have said.
His very public rebuke is instead a warning Beijing has lost patience with the outsize power of its technology moguls, increasingly perceived as a threat to the political and financial stability Chinese President Xi Jinping (習近平) prizes most.
Alibaba shares slid as much as 8.9 percent in Hong Kong to a five-month intraday trough yesterday. Asia’s largest corporation after Tencent has led losses among China’s Internet sector leaders since Ant’s IPO got yanked last month, taking the overall toll to more than US$100 billion.
Tencent slid more than 2 percent and Internet services giant Meituan declined more than 4 percent, while Softbank Group Corp, Alibaba’s largest shareholder, sank as much as 2.9 percent in Tokyo.
Investors remain divided over the extent to which Beijing would go after Alibaba and its compatriots, as it prepares to roll out the new anti-monopoly regulations.
The country’s leaders have said little about how harshly they plan to clamp down or why they decided to act now.
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