Chinese regulators have ordered Ant to overhaul its business and “return to its payment origins” as the nation continues to crack down on the fintech company.
Officials in a meeting over the weekend accused the company of “turning a blind eye” to regulatory requirements.
The news comes after China pulled Ant’s would-be $37 billion IPO in early November after founder Jack Ma publicly dismissed the nation’s regulatory system as outdated.
China’s new order also comes a week after it announced it was launching an antitrust investigation into Alibaba, which Ma also founded, over alleged monopolistic business practices.
The move signals China’s ongoing mission to reign in tech companies to prevent them from becoming too powerful.
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China has ordered Ant Group to change parts of its business and scale back to its origins as a payment service as the nation’s government continues to rein in the fintech giant.Regulators met with executives at the company over the weekend, The Telegraph reported, and told Ant to rectify its “illegal” financial services, like its lucrative online credit business.Officials reportedly said Ant has “defied” regulations and taken part in anticompetitive business practices, as well as harmed consumer rights, according to a CNN report.Chinese authorities did not explicitly tell Ant to split up its company or divest any of its operations, but they did instruct Ant to “understand the necessity of overhauling its business,” per the Telegraph. China also directed Ant to “return to its payment origins.”
Pan Gongsheng, a deputy governor at the Chinese central bank, said Ant had become “indifferent” to China’s requirements, according to The Telegraph.When asked for comment, Ant Group pointed Business Insider to a company blog post in which Ant said it did indeed meet regulators on Sunday. “Under the regulators’ guidance, Ant Group will establish a rectification working group and fully implement requirements raised at the meeting to bring into line the operation and development of our financial-related businesses,” Ant said in the post.Ant began as a parent company to Alipay, a digital payments processor for the Chinese ecommerce giant Alibaba. Ant was later spun out of Alibaba and became an industry power player in its own right, blossoming into a fintech behemoth that offered a variety of financial services that included its original payment platform as well as insurance offerings and lending options. Chinese billionaire Jack Ma is the founder of both companies.
Read more: China reportedly demanded that big Chinese tech companies like Alibaba process stolen US data for the nation’s top spies upon requestNews of China’s order comes after news surfaced that Ma offered to give parts of Ant Group to the Chinese government in a November 2 meeting, according to a Wall Street Journal report last week.”You can take any of the platforms Ant has, as long as the country needs it,” Ma reportedly told regulators at the November meeting, according to the Journal.Ma made that offer after he earlier publicly scorned the nation’s financial regulatory system. China then introduced new micro-lending rules that directly impacted Ant as it was gearing up for what was going to be a record-breaking $37 billion IPO on November 5.
But the offer failed to win China over, and authorities pulled the IPO.Read more: Ant was heading for a record-breaking $37 billion IPO before its dreams were dashed by Chinese regulators, and experts say it may no longer be the hailed fintech disruptor the banking sector expectedWord of China’s crackdown on Ant also comes days after the nation announced it was launching an antitrust investigation into Alibaba over alleged monopolistic practices. China announced new rules in early November that could prevent internet companies from holding too much power in the market. The regulations are designed to set stricter anti-competitive behavior guidelines and prevent certain practices, like companies banding together to stomp out smaller competitors.
Read more: Here’s how Alibaba is growing the global reach of Singles’ Day with help from US brands like Allbirds and FenderAlibaba CEO Daniel Zhang called the new rules “timely and necessary,” comments that contrast sharply with those made by Ma in October when he dismissed China’s regulatory rules as outdated.
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