Chinese authorities announced a fine of nearly $1 billion for financial technology firm Ant Group on Friday, nearly three years after regulators halted the company’s plan for a record-breaking public offering that had prompting 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 winding down investigations into technology companies, ending an era of tight regulation for the industry. Officials said this year they would begin relaxing oversight of tech firms. The 2020 crackdown on Ant was followed by a record $2.8 billion antitrust fine for e-commerce giant Alibaba, Ant’s sister company, and a $1.2 billion penalty for Didi, a ride sharing service.
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 change in their focus, as “most of the known problems in the financial business of the technology giants have been fixed.”
Ant Group said in a statement that it has been “proactively carrying out business correction since 2020” and “will follow the terms of the sanction with all sincerity and honesty.”
Ant, founded in 2014, is one of the largest online financial tech companies in the world. In November 2020, Chinese authorities halted Ant’s blockbuster initial public offering days before it was set to raise an estimated $34 billion in Hong Kong and Shanghai in what was expected to be the world’s largest IPO.
A month later, Chinese regulators ordered Ant to change its business. The People’s Bank of China, the country’s central bank, said at the time Ant “didn’t care” about 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 stifling innovation and being overly cautious. Then, Mr. disappeared from the public eye. Ma, the most famous Chinese tech entrepreneur.
Ant Group said this year that Mr. Ma would hand over control of the company. At the same time, China’s central bank said it was nearing the end of its Big Tech regulatory campaign. Mr. Ma’s recent reappearance in mainland China after spending much of his time abroad has fueled speculation that he may return to a larger role at Alibaba. Last month, in a shake-up, two longtime executives who helped Mr. Ma found Alibaba were put 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 chief executives and boards of directors. This decision could help the units complete successful IPOs and ease Beijing’s concern over the tech giant’s concentration of power and influence.
Ant’s estimated value was reduced to $63.8 billion from $235 billion before Chinese authorities halted its IPO in November 2020, according to Bloomberg.
