For Jack Ma, The Cost Of Insubordination Is $11 Billion (And Counting)

Poor Jack Ma.

I mean, not really. Things can’t be all that bad if you’re the 25th richest person on the planet.

But as far as people who are worth $51 billion go, “poor” Jack Ma.

Jack was informally accused of a crime early last month, and suffice to say most people don’t think what he did was any semblance of criminal.

During a speech in late October, Ma suggested China’s regulators might be stifling innovation in the country. So, his offense can be loosely described as “opening one’s mouth in Shanghai.” When it comes to things that shouldn’t be crimes, that’s on par with that old, half-joking lament about African Americans getting arrested in the US simply for “being black on a Saturday.”

As those who’ve followed this story are acutely aware, Ma’s criticism (which wasn’t exclusively aimed at Beijing, by the way) cost him and his empire dearly.

In what is now widely described as a retaliatory measure, Chinese officials iced Ant Group’s planned dual-listing in Shanghai and Hong Kong. It would have been the largest IPO in history.

That was on November 3. Less than two weeks later, Beijing embarked on an aggressive regulatory and anti-monopoly push aimed at Chinese tech giants.

Late last week, Ant was summoned by the PBoC. That’s about like getting “sent for” in the Italian mob. As Lefty told Donnie: “What do you think it means? In our thing, you get sent for, you go in alive and you come out dead. And it’s your best friend that does it.”

Sure enough, Ant was advised to return to its roots as a payment processor and ordered to address a litany of grievances and complaints. Alibaba saw its shares crushed. Its peers were similarly beset.

Now, Ant may try to roll up a hodgepodge of its financial operations — including wealth management, consumer lending, and payments — into a holding company, Bloomberg reported this week. It would be regulated “more like a bank,” sources said.

While the move could “potentially cripple the growth of its most-profitable units,” Bloomberg also noted that such a shakeup “suggest[s] Ant would still be able operate in financial services beyond its payments business, quelling investor concern about how to interpret the central bank’s Sunday message.”

“It was not clear if Ant’s payments business Alipay, which is [the] second-biggest revenue generator for the group after consumer lending, would also come under the holding company structure,” Reuters remarked, commenting on the same plans.

Meanwhile, the Wall Street Journal said Tuesday that Beijing is actively “seeking to shrink Jack Ma’s empire.” That’s not exactly a secret at this point, but the Journal also suggested the government “might take a larger stake in his businesses,” perhaps through “big state banks or other types of government-controlled entities.”

That gives you an idea of what Ma is dealing with on a daily basis.

There is, of course, something absurd about feeling sorry for someone who, theoretically, could personally bankroll more than 5% of America’s latest virus relief package. But this targeted crackdown seems truly draconian, not in an absolute sense (Xi has certainly done worse), but rather proportionate to the “crime.”

The figure (below) is essentially just an illustrated version of recent events. From the time Ma decided to criticize regulators in late October through Tuesday, the price of insubordination was around $11 billion — with a “b.”

I suppose what I would also note is that this isn’t just Donald Trump tweeting away a few hundred million from Jeff Bezos or US lawmakers shaving a few billion off the paper fortunes of America’s tech moguls by taking the first serious steps towards regulatory scrutiny and anti-monopoly proceedings.

Rather, this is direct, personalized, intervention from on high in Beijing, and it comes via decree. Not via silly tweets and not via lawsuits that will invariably be dragged out for years. But by stone, cold decree.

Render unto Caesar, Jack. And unto God while you’re at it. You can just write one check, though. Because Caesar and God are the same person in China.