Chinese authorities announced a nearly $1 billion fine on financial technology firm Ant Group on Friday, nearly three years after regulators halted the company’s plan for a record-breaking public offering, ushering in a period of intense government scrutiny of technology companies.
The fine announced by China’s top securities regulator is seen as a sign that authorities are closing investigations into technology companies, ending a period of tight regulation for the industry. Officials said this year they would begin loosening oversight of tech companies. The 2020 crackdown on Ant was followed by a record $2.8 billion fine on e-commerce giant Alibaba, Ant’s sister company, and a $1.2 billion fine on ride-sharing service Didi.
Regulators fined Ant and its subsidiaries 7.1 billion renminbi ($985 million) and ordered the company to shut down its crowdfunding platform for medical expenses, Xianghubao. Regulators also announced a shift in focus as “most of the prominent issues in technology giants’ financial affairs have been addressed.”
Ant Group said in a statement that it has been “proactively undertaking business rectifications since 2020” and would “comply with the terms of the fine in all seriousness and fairness”.
Founded in 2014, Ant is one of the world’s largest online financial technology companies. In November 2020, Chinese authorities halted Ant’s blockbuster IPO days before it was expected to raise an estimated $34 billion in Hong Kong and Shanghai in what was expected to become the largest IPO in the world.
A month later, Chinese regulators ordered Ant to revamp his business. The People’s Bank of China, the country’s central bank, said at the time that Ant was “indifferent” to the law. The central bank ordered the company to improve transparency, strengthen corporate governance and establish a holding company.
The investigation into Ant began after its founder and billionaire entrepreneur, Jack Ma, publicly criticized Chinese regulators in 2020 for nipping innovation in the bud and being overly cautious. Then Mr. Ma, the most prominent Chinese tech entrepreneur, disappeared from the public eye.
Ant Group said this year that Mr Ma would relinquish control of the company. Around the same time, China’s central bank said it was almost done with its Big Tech regulatory campaign. The recent return of Mr. Ma in mainland China after spending much of his time abroad has sparked speculation that he may be returning to a bigger role at Alibaba. Last month, in a stir, two longtime executives who had been Mr. Ma helped found Alibaba, in charge of the company.
Alibaba Group said in March that it would become a holding company and restructure the group into six different business units with their own CEO and board of directors. This decision could help the units complete successful IPOs and allay Beijing’s concerns about the tech giant’s concentration of power and influence.
According to Bloomberg, Ant’s estimated worth was reduced from $235 billion to $63.8 billion before Chinese authorities halted the IPO in November 2020.