Jack Ma, Chairman of Alibaba Group Holding Ltd., speaks during a fireplace interview at the Viva Technology conference in Paris on May 16, 2019.
Marlene Awaad / Bloomberg | Bloomberg | Getty Images
Chinese regulators have ordered Ant Group, the world’s largest financial technology company, to rectify its business and comply with regulatory requirements while scrutinizing antimonopoly practices in the country’s internet sector.
People’s Bank of China, the country’s central bank, on Saturday summoned Ant executives and ordered them to formulate an adjustment plan and schedule for the implementation of their business, including credit, insurance and asset management services, regulators said in a statement on Sunday with.
The statement said the Ant Group lacked a solid governance mechanism, defied regulatory compliance requirements, and engaged in regulatory arbitrage. The company used its market position to exclude competitors and violate the rights and interests of consumers.
The meeting came after Chinese regulators halted Ant’s $ 37 billion stock debut in Shanghai and Hong Kong last month due to regulatory changes, and just days after China launched an antimonopoly investigation by e-commerce giant Alibaba Group had announced, in which 33% of the shares hold ants group.
The orders from the regulators could limit the expansion of the Ant Group and mess up the lucrative financial business.
Ant Group, which began as a payment service provider for Alibaba’s Taobao e-commerce platform, has since expanded to offer insurance and investment products to its hundreds of millions of users in mainland China. Jack Ma, the founder of Alibaba and Ant Group, is one of the richest and most famous entrepreneurs in China.
The regulators ordered the Ant Group to set up a financial holding company and have sufficient capital. They also said the Ant Group should return to its payment origins, improve transparency in transactions and ban unfair competition while improving corporate governance and ensuring that regulatory requirements for its businesses are being met.
The Ant Group said in a statement on Sunday that it will meet regulatory requirements and improve risk management and control, and that a working group will be set up to make the necessary corrections.
“We appreciate the guidance and help from financial regulators,” the statement said. “The rectification is an opportunity for Ant Group to build the foundation for our business to grow in full compliance and to continue to focus on innovation for the social well-being and serving small businesses.”
Ant Group and Alibaba review comes as China is scrutinizing the influence of the country’s internet sector.
Last month, China released a draft regulation to curb anti-competitive practices in the industry, such as signing exclusive agreements with dealers and using subsidies to knock out competitors.
Alibaba and one of Tencent Holding Ltd. Outsourced company was fined this month for failing to apply for official approval prior to some acquisitions.
Last Tuesday, regulators met with executives from Alibaba and five other major Chinese internet companies and warned them not to abuse their dominance to evict competitors through the use of exclusive contracts, predatory pricing and other tactics, according to a statement from the state market administration regulation .