China Targets Jack Ma’s Alibaba Empire in Monopoly Probe

(Bloomberg) - China opened an investigation into alleged monopoly practices at Alibaba Group Holding Ltd. and convened subsidiary Ant Group Co. for a high-level meeting on financial regulations that escalated control of the two pillars of billionaire Jack Ma's internet empire.
The state market regulator is investigating Alibaba, the top antitrust watchdog said in a statement without further details. Regulators like the Central Bank and the Bank Guard will separately invite subsidiary Ant to a meeting to bring home increasingly stringent financial regulations that are now a threat to the growth of the world's largest online financial services company. Ant said in a statement on its official WeChat account that it will investigate and meet all requirements.
Alibaba and rivals like Tencent Holdings Ltd., once hailed as the drivers of economic prosperity and symbols of the country's technological prowess, are facing increasing pressure from regulators after they have amassed hundreds of millions of users and influence almost every aspect of daily life won in China. Shares in SoftBank Group Corp., Alibaba's largest shareholder, cut Tokyo trading profits by up to 2.7%. Alibaba's Hong Kong stock was down 3.4%.
Investors disagree on the extent to which Beijing will persecute Alibaba - Asia's largest company after Tencent - and its compatriots as Xi Jinping's government prepares to introduce a series of new antimonopoly regulations. The country's leaders have said little about how hard they are planning to contain or why they have decided to act now. The rulings published in November give the government an unusually large amount of leeway to contain tech entrepreneurs like Ma, who until recently had an unusually large amount of freedom to expand their empires.
Read More: Jack Ma Goes Calm After Ant Group's Spectacular Undo
Alibaba's flamboyant co-founder has almost disappeared from the public eye since Ant's IPO. In early December, when his empire was under regulatory control, the man most closely identified with the meteoric rise of China Inc. was advised by the government to stay in the country, said a person familiar with the matter. Alibaba representatives were not immediately available for comments.
The country's internet ecosystem - long sheltered from competition from Google and Facebook - is dominated by two companies, Alibaba and Tencent, via a labyrinthine investment network that includes the vast majority of the country's startups in areas from AI to digital finance. Her patronage has also nurtured a new generation of titans, including food and travel giants Meituan and Didi Chuxing - China's Uber. Those who thrive outside of their aura, with the largest TikTok owner being ByteDance Ltd. is are rare.
The antimonopoly rules now threaten to disrupt that status quo with a range of potential outcomes, from a harmless fine scenario to the breakup of industry leaders. Beijing's various agencies now seem to be coordinating their efforts - a bad sign for the internet sector.
"Of all the regulatory hurdles, this is by far the biggest," said Mark Tanner, managing director of Shanghai-based consulting firm China Skinny. "China has tightened much of the bureaucracy so that the various regulators can now more easily work together."
Read More: $ 290 Billion Less, China Tech Investors Mull Nightmare Scenarios
(Updates with Ant's answer from the second paragraph)
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