China has instructed the world’s largest online payment platform to refine many ways in which it operates as regulators continue their efforts to control some of China’s most powerful online companies.
Financial regulators unveiled a list of expectations of Ant Group executives at a meeting on Saturday, according to Pan Gongsheng, deputy governor of the People’s Bank of China. The central bank on Sunday released a statement on Pan’s remarks to the media about a meeting with Ant Group. Representatives of the central bank attended the meeting, as well as security, banks and external financial regulators.
Accusations Against The Company
Officials have accused Ant Group of “degrading” laws, removing its rivals from the market, undermining consumer rights, and using regulatory measures to make a profit. They also accused the company’s structure in corporate governance of being “unreasonable,” according to Pan’s statement.
Authorities did not explicitly ask to be separated from Ant Group, Alibaba-affiliated company (BABA) which operates China’s largest online payment software, Alipay, and offers everything from investment accounts and small savings products to insurance, credit scores and even profiles for dating. The business is owned by billionaire Jack Ma.
But Pan’s statement suggested that Beijing wanted Ant Group to review its performance. Managers have told the company – which is already in the area of a digital payment platform to a major financial empire – to “go back” and focus on its “first” payment services, among other activities, according to Pan.
Pan also said regulators expected Ant Group to make changes to several of its businesses, and called for a “strong overhaul” of its credit, insurance and asset management services. It also said that its credit bureau needed to focus on protecting the privacy of the information it collects.
“The Ant Group must fully realize the seriousness and need for this adjustment,” said company executives. They added that the company should develop a plan to implement this change “as soon as possible.”
Ant Group’s Response
The Beijing announcement comes almost two months after authorities announced the first Ant Group launch in Hong Kong and Shanghai at the last minute. It would be the largest stock market in the world.
Ant Group said on Sunday it would look at the latest needs, adding that it would focus on innovation, provide for small businesses and increase international competition for the benefit of the country.
“We appreciate the guidance and assistance of financial regulators,” the company said.
China’s Crackdown On Monopoly
It’s not just Ant Group under the microscope in China. President Xi Jinping made it clear at a recent economic conference that one of the country’s most important goals for next year is to strengthen efforts to combat self-regulation against social media and prevent “unplanned growth”, according to state news agency Xinhua.
And last week, the country’s top market regulator said it would investigate allegations of one-man behavior by Alibaba. It also summoned representatives of Alibaba, Tencent (TCEHY), JD.com (JD) and other major online companies and warned them of unfairly disposing of goods, creating a single state and abusing consumer data for profit.
The technology sector is driven by greater scrutiny. On Monday, Alibaba’s shares fell 8% in Hong Kong, with the company announcing that it strongly recommended the size of the ongoing stock exchange program.
The stock, which trades at its lowest levels in six months, has lost 32% since its peak in October, just before the Ant Group IPO was pulled. That amounts to about $ 300 billion to erase their market value.
Some tech stocks suffer, too. Tencent sank at 6.7%, while JD.com lost 2.2%. Meituan, the largest online service platform, lost 6.9%.