Ant Group to restructure after pressure from regulators . . .
In the wake of the surprising suspension of Ant Group’s record-breaking initial public offering in November, reports this week indicate the company plans to restructure its operations under a licensed financial holding company to placate regulators’ concerns over transparency and risk. The move comes as Ant remains under intense regulatory scrutiny after Jack Ma, the renowned founder of Ant and its affiliate Alibaba, retreated from public life after publicly criticizing financial regulators. The Chinese government launched an anti-trust probe against Alibaba for “suspected monopolistic practices” in late December. Beijing’s investigation of Ant may well be the first battle in a broader campaign to rein in fintech and Big Tech companies.
Government’s growing concern over Big Tech amidst recent scandals . . .
Though notable, Ma’s outspoken comments seem not to have been the primary factor behind Beijing’s new regulatory actions. Since last year, authorities have been concerned about a shocking increase in debt defaults and unregulated lending, with China’s total debt-to-GDP ratio estimated to have reached a record-breaking 335 per cent in 2020. Ant’s online loans have been blamed for contributing to this trend. China’s suspicion of Ant extends to other conglomerates, with regulators scrutinizing Tencent and others for proposed acquisitions that are expected to squeeze out competition in their respective industries.
For formerly revered tech giants, pride goeth before the fall . . .
Ma’s fall from grace – not only in the eyes of the government but also among civil society – represents a shift in public opinion toward some of China’s leading companies. Ma and other tech giants have increasingly been criticized as “evil capitalists” for increasing their companies' increasing profitability amidst widening income inequality and worsening job prospects domestically. Ma’s advocacy of the so-called ‘996 work culture’ (working from 9 am to 9 pm, six days a week) has been widely influential in the tech industry, but despised by young tech workers, one of whom died while working for China’s largest agriculture-focused tech platform Pinduoduo earlier this month to public controversy. As Big Tech is increasingly blamed for the precarity of contemporary Chinese middle-class life, public dissatisfaction will likely continue to pressure authorities to rein in the companies primarily responsible for China’s recent economic success.
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- Nikkei Asia: Ant eyes holding company structure under regulatory pressure
- New York Times: Why China turned against Jack Ma
- Sixth Tone: Overtime culture back in spotlight after Pinduoduo employee’s death
