Never a dull moment in Xi Jinping’s sweeping regulatory crackdown.
China’s besieged tech giants were forced to reckon with yet another foreboding headline on Monday, after FT suggested Beijing has Jack Ma’s empire in the crosshairs. Again.
Chinese regulators are looking to break up Ant Group’s Alipay, according to a pair of sources, who said Beijing aims to create a separate app for the company’s loan business.
This is hardly surprising. After all, Xi’s “profound revolution” began with Beijing’s last minute decision to ice Ant’s IPO just days after Ma criticized regulators during a now infamous address in Shanghai last October. The rest, as they say, is history (figure below).
Monday’s Alipay news came on the heels of reports that China was poised to suspend approvals for new online games as part of a broad effort to protect the nation’s youth from what one state-run media outlet called “spiritual opium” in an abrasive column last month. That put Tencent back on the hot seat.
Subsequently, the South China Morning Post “clarified.” Beijing hasn’t, in fact, imposed a moratorium on new online games, the paper said Friday. Rather, Chinese regulators have merely “slowed” approvals “temporarily.”
Earlier this month, The National Radio and Television Administration effectively banned dissent of any kind in a decree which also capped actors’ pay and discouraged “vulgar” displays of wealth.
The plan reported by FT on Sunday evening also calls for Ant to surrender user data that informs lending decisions to a new, state-controlled joint venture. As a reminder, Ant’s IPO would have been the largest in history (figure below).
Over the last several weeks, some of China’s largest companies have pledged billions to Xi’s “common prosperity” initiative in an effort to placate Beijing. Alibaba pledged $15.5 billion.
Initially, the market seemed to believe China Inc.’s obsequious pandering was money well spent. But by last week, the idea of handing over shareholder wealth on the possibly misguided hope that Xi will back off was starting to be viewed with trepidation.
As one analyst quoted by Bloomberg put it, while discussing Alibaba’s massive commitment, “the donation doesn’t guarantee that there will not be more regulations target[ing] the company.”
Now here we are, just a few days later, and Beijing is apparently ready to take a chisel (or a sledgehammer) to Alipay.
Any verified recent Jack Ma sightings?