Apparently, China is not going to allow its big tech to dominate the business world as it begins an investigation into Alibaba and causing a big stock drop on Thursday.
Officials said Thursday the jewel of Jack Ma’s ever-growing tech empire is the target of increased scrutiny that could lead to tighter regulations, and, separately, other Chinese regulators will meet with Ma’s Alibaba affiliate Ant Group to implement stricter financial regulations in its banking services. Ma, the co-founder of Alibaba and Ant, is China’s richest person.
China already had introduced new regulations that clamped down on Ant’s lending business after Ma made critical comments about China’s banking rules. In November, the company’s massive initial public offering was suspended just days before the planned listing in Hong Kong and Shanghai.
The focus of this action, undertaken by China’s State Administration for Market Regulation (SAMR), is exclusivity contracts forced by Alibaba on sellers, whose opportunity to sell their wares to others is being eliminated.
It seems the big-tech explosion comes with some uncertainty regarding business practices since a former senior Alibaba executive has called it “standard market practice.”
Ant confirmed the notice of a meeting with regulators in a public statement. A report from Reuters said financial regulators will also be meeting with Alibaba’s Ant Group fintech arm, as per a separate statement by the People’s Bank of China.
This meeting would “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” states the report.
Alibaba shares fell by 8.1% Thursday, its largest one-day slide since mid-November. Alibaba said in a statement that it would cooperate with all the regulators and that its business operations would remain normal.