China launched an antitrust investigation into Alibaba, regulators said Thursday, increasing pressure on the e-commerce giant and causing its share price to drop.
Regulators will also hold “oversight and guidance” talks with Ant Group, Alibaba’s giant financial services subsidiary, state media reported, just weeks after Beijing halted its record IPO at the last minute.
The measures demonstrate mounting state pressure on one of the country’s most influential companies, whose success revolutionized the e-commerce landscape and made founder Jack Ma China the richest man in China.
Investigators are searching Alibaba for “suspected monopolistic practices,” the State Administration for Market Regulation said in a statement.
Alibaba shares fell 5.48 percent on the news shortly after the Hong Kong Stock Exchange opened Thursday morning.
Its financial services subsidiary, Ant Group, said in a statement that it would “diligently study and strictly comply with requests from regulatory departments.”
Ant Group made a name for itself through its flagship product Alipay, the online payments platform and super app that is now deeply embedded in China’s economy.
But the company has also expanded to offer loans, credit, investments and insurance to hundreds of millions of consumers and small businesses, sparking fear and jealousy in a broader banking system geared more toward supporting state policy and large corporations. .
As global demand for the Hong Kong-Shanghai double listing pushed the IPO toward record valuations, which could give Ma and Ant Group even more funding, legitimacy and influence, Chinese regulators acted.
The outspoken and charismatic Ma had previously attacked China’s outdated financial system, calling state banks “pawnshops” in an October speech that led to him being summoned for regulatory talks shortly before Ant’s IPO was suspended.
This year, Beijing also implemented new regulations to contain potential risks in China’s growing online lending industry, as the fintech branches of Internet companies, including Alibaba and Tencent, have expanded and consolidated their power over the market. market.
State media have repeatedly called for stricter oversight of these companies, warning of possible financial instability as a result of their rapid unregulated growth.
“This is an important step for our country to strengthen antitrust oversight in the Internet sector, leading to … promoting the healthy and long-term development of the platform economy,” said a comment Thursday in the state spokesperson People’s Daily.
Bad debts in China’s chaotic financial system are a permanent risk, and regulators launched an offensive against a growing addiction to credit across the country three years ago due to fears of a financial collapse.