BEIJING, China”•China has launched an anti-monopoly investigation into Alibaba, regulators said Thursday, sending the share price of the e-commerce giant tumbling and intensifying the troubles of its billionaire founder Jack Ma.
Regulators will also hold “supervisory and guidance” talks with Alibaba’s gigantic financial services subsidiary Ant Group, state media reported, just weeks after its record-breaking IPO was halted at the last minute by Beijing.
The continued squeeze on one of China’s most influential companies is the latest sign that the Communist leadership is ready to deflate the ambitions of big tech firms in a runaway internet sector, which has made Ma one of China’s richest people with an estimated $58-billion fortune.
Investigators are probing Alibaba for “suspected monopolistic practices,” the State Administration for Market Regulation said in a statement.
The probe threatens to impede the growth of Alibaba, a tech juggernaut which revolutionized the e-commerce landscape of China.
Alibaba shares tumbled 8.6 percent to a five-month low in Hong Kong on the news.
In a statement, the company said it “will actively cooperate with the regulators on the investigation.”
Financial services subsidiary Ant Group said it too would cooperate and “diligently study and strictly comply with regulatory departments’ requests.”
Ant Group made its name via its main product Alipay, the online payments platform and super-app that is now deeply embedded in China’s economy.
But the company has also expanded into offering loans, credit, investments and insurance to hundreds of millions of consumers and small businesses, spurring fear and jealously in a wider banking system geared more for supporting state policy and large corporations.
Its reach into the daily spend of Chinese has also caused anxiety over the potential for personal debt to turn sour and toxify the wider economy.
As global demand for the dual Hong Kong-Shanghai listing pushed the IPO toward record valuations”•potentially handing Ma and Ant Group even more funding, legitimacy and clout”•Chinese regulators acted.
The outspoken and charismatic Ma”•a former teacher”•had previously lashed out at China’s outdated financial system, calling state-owned banks “pawn shops” in an October speech that led to him being summoned for regulatory talks shortly before Ant’s IPO was suspended.
He has edged away from the public limelight since the IPO collapsed.
Noises from the top of the Chinese Communist Party are ominous for companies perceived to have outsized ambitions.
Party leaders at last week’s Central Economic Work Conference vowed to strengthen anti-trust measures and “firmly oppose monopolies” while the Party’s executive Politburo body has also vowed to crack down on “disorderly capital expansion.”
“There is an underlying political message, that no company, and no individual, can grow so big in China to the point where they can potentially challenge the authority of the CCP,” Richard McGregor, senior fellow for East Asia at the Lowy Institute in Sydney, told AFP. AFP