China launched an inquiry into alleged monopolistic practices by Alibaba Group Holding Ltd. and incorporated subsidiary Ant Group Co. to a high-level meeting on economic rules that escalated control of the two pillars of billionaire Jack Ma’s Internet empire.
The state administration for market regulation is investigating Alibaba, the top antitrust guard said in a statement without further details. Supervisors including the central bank and the bank guard will separate convened affiliated with Ant for a meeting aimed at driving home increasingly stringent financial rules, which now pose a threat to the growth of the world’s largest online financial services company. Ant said in a statement on its official WeChat account that it will investigate and comply with all requirements.
Once hailed as a driving force for economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals such as Tencent Holdings Ltd. is facing increasing pressure from regulators after amassing hundreds of millions of users and influencing almost every aspect of daily life in China. Shares in SoftBank Group Corp., Alibaba’s largest shareholder, deleted trading gains as much as 2.7% lower in Tokyo. Alibaba’s Hong Kong stock slipped 3.4%.
Investors disagree on the extent to which Beijing will follow Alibaba – Asia’s largest company after Tencent — and its compatriots as Xi Jinping’s government prepares to roll out a series of new antitrust rules. The country’s leaders have said little about how hard they plan to squeeze down, or why they decided to act now. Draft rules released in November give the government an unusually high latitude to rein in tech entrepreneurs like Ma, who until recently have had unusual freedom to expand their empires.
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The flamboyant co-founder of Alibaba has almost disappeared from the public eye when Ant’s original public offering was derailed. From the beginning of December, with his empire under regulatory control, the man most identified with the meteoric rise of China Inc., advised by the government to stay in the country, has a person familiar with the matter, said. Alibaba representatives were not immediately available for comment.
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 investment network that includes the vast majority of the country’s startups in arenas from AI to digital. finance. Their patronage has also marked a new generation of titans including the food and travel giant Meituan and Didi Chuxing – China Uber. Those who thrive outside of their aura, the biggest is TikTok owner ByteDance Ltd., are rare.
The antimonopoly rules now threaten to disrupt the status quo with a range of potential results, from a benign scenario with fines to a look up of industry leaders. Beijing’s various agencies now appear to be coordinating their efforts – a bad sign for the Internet sector.
“Of all the regulatory hurdles, this is the largest in the long run,” said Mark Tanner, CEO of Shanghai-based consulting firm China Skinny. “China has streamlined much of the bureaucracy, so it’s easier for the various regulators to work together now.”
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(Updates with Ant answers from the second section)