China’s regulators targeting payments app as part of tech crackdown, say reports
Last modified on Mon 13 Sep 2021 04.21 EDT
Shares in Chinese technology giant Alibaba have fallen sharply after reports said regulators wanted to break up Alipay, the payments app with 1bn-plus users owned by Jack Ma’s Ant Group.
Beijing is seeking to create a separate app for the company’s highly profitable loans businesses, in the latest crackdown on China’s technology sector by the state’s authorities.
Chinese regulators are reportedly concerned at the financial risk building in the economy; Alipay’s loans business helped issue about 10% of the country’s non-mortgage consumer loans last year.
Regulators have already ordered Ant Group to separate the back end of its two lending businesses, Huabei and Jiebei, from the rest of its financial offerings.
Beijing wants the two businesses to be split into a separate independent app, while also requiring Ant to share user data to a new credit scoring joint venture that would be partly state-owned, according to the Financial Times. State-owned companies in Ant’s home province, including the Zhejiang Tourism Investment Group, would hold a majority stake in the new joint venture.
The news sent shares in Alibaba down as much as 6% in trading in on Monday as the wider Hang Seng Tech index, which tracks China’s biggest tech groups listed in Hong Kong, fell more than 3% over investor concerns about the latest crackdown.
The business empire of Jack Ma, the co-founder of both Ant Group and Alibaba, has become a lightning rod in the crackdown on big tech by Chinese regulators.
In April, Alibaba paid a record $2.8bn (£2bn) fine to settle an investigation by Chinese regulators into anti-competitive practices at the company.
Authorities began to focus on businesses owned by Ma, one of China’s most popular, outspoken and wealthiest entrepreneurs, after he gave a blunt speech last year criticising national regulators, which reportedly infuriated the president, Xi Jinping.
After the comments, Chinese regulators blocked the $34bn stock market flotation of Ant Group, which would have been the biggest share offering in history.
In March, Beijing ordered Alibaba to sell off some of its media assets, including Hong Kong’s South China Morning Post.
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