Chinese government issues and investigation into alleged Monopolistic practices at Alibaba Group Holding Ltd. Ant Group Co. has also been summoned to a high-level meeting over financial regulation.
The top antitrust watchdog said in a statement that the State Administration for Market Regulation is investigating Alibaba. Regulators including the central bank and banking watchdog will 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
Alibaba’s Hong Kong stock slid as much as 7.7% to a five-month intraday trough, while Tencent and internet services giant Meituan declined more than 1%. Shares in SoftBank Group Corp., Alibaba’s largest shareholder, erased gains to trade as much as 2.7% lower in Tokyo.
The chances that Ant will be able to revive its massive stock listing next year are looking increasingly slim as China overhauls rules governing the fintech industry, which in past years has boomed as an alternative to traditional state-backed lending.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd. face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Ant said in a statement on its official WeChat account it will study and comply with all requirements.
The country’s internet ecosystem — long protected from competition by the likes of 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 arenas from AI to digital finance.
Their patronage has also groomed a new generation of titans including food and travel giant Meituan and Didi Chuxing — China’s Uber. Those that prosper outside their aura, the largest being TikTok-owner ByteDance Ltd., are rare.
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders. Beijing’s diverse agencies now appear to be coordinating their efforts — a bad sign for the internet sector.
The People’s Daily, the mouthpiece of the Communist Party, warned Thursday that fighting alleged monopolies was now a top priority. “Anti-monopoly has become an urgent issue that concerns all matters,” it said in a commentary coinciding with the probe’s announcement. “Wild growth” in markets needs to be curbed by law, it added.
Mark Tanner, managing director of Shanghai-based consultancy China Skinny said that “China has streamlined a lot of the bureaucracy so it’s easier for the different regulatory bodies to work together now.”