China’s fast-moving campaign to curb the power of internet giants has hit its latest mark: Ant Group, the fintech sister company of the e-commerce behemoth Alibaba.
Ant announced on Monday that it would undertake a sweeping, government-ordered overhaul of its business to allay regulators’ concerns about the way it competes with rivals, its large-scale collection of user data and the risks its business may pose to the wider financial system.
Beijing has made the corporate empire of Jack Ma, Alibaba’s billionaire co-founder and Ant’s controlling shareholder, an early major target as it dials up its scrutiny of Big Tech. Chinese officials forced Ant to call off its blockbuster initial public offering last November, mere days before its shares had been expected to debut. On Saturday, China’s antitrust authority fined Alibaba $2.8 billion for abusing its dominance in digital retail — a record penalty for violations of the country’s antimonopoly law.
Ant’s flagship Alipay app has become an indispensable tool for more than 700 million monthly users in China. But Alipay’s size and influence put Ant at the center of a swirl of concerns for Beijing, including the power of web platforms, the role of internet technology in finance and the influence of moguls like Ma at a time when China’s leader, Xi Jinping, is seeking greater state control over the economy.
As part of what both Ant and Chinese officials called a “rectification plan,” the company said Monday that it would apply to become a financial holding company, which would bring closer supervision and requirements that it hold onto more money that it might otherwise lend or put to profitable use.
Ant said it would also “return to its payment origins.” Alipay started out nearly two decades ago as a payment service for Alibaba’s shopping platforms. But as Ant has come to offer other financial services within Alipay, the app has become a major vehicle in China for consumer credit and small-business loans as well.
The company also said it would strengthen security protections for the personal information it collects to prevent abuse.
“Under the guidance of financial regulators, Ant Group will spare no effort in implementing the rectification plan,” the company said in a statement.