On December 26, 2020, four Chinese financial regulators, including the central bank, summoned Ant Group for regulatory talks, ordering the fintech giant to “rectify” its regulatory violations and “return to its payment origins.”

Pan Gongsheng, a deputy governor at the People’s Bank of China (PBoC), described what had been discussed during the meeting, stating that Ant was “indifferent” to the law, “looked down” upon compliance requirements, and engaged in “illegal regulatory arbitrage.” Ant’s corporate governance is “not sound,” Pan said, the company takes advantage of its dominance to exclude rivals and harm consumers’ interests.

The financial regulators laid out a five-point compliance agenda for Ant. First, Ant must “return to its payment origins,” enhance transaction transparency and prohibit acts of unfair competition. It must also obtain the necessary licenses for its credit businesses and protect user data privacy. Ant should establish a financial holding company and ensure that the group meets capital requirements. Finally, it needs to revamps its credit, insurance, wealth management and other financial businesses according to the law, as well as step up compliance for its securities business.

Ant issued a statement on that very same day, saying that it will “fully implement the requirements” and ensure “corporate compliance.” The group added that it had already begun “[formulating] a rectification plan.”

Ant is the world’s largest fintech company. The group started out as a payment service for Alibaba’s e-commerce platform before expanding to offer insurance and investment products to hundreds of millions of users in mainland China.

The incident is the latest move by Chinese authorities targeting the country’s Internet tech giants amid concerns over their increasing power and influence.

In November, regulators introduced new draft antitrust laws to restrict Internet companies’ data collection and use, and measures to protect consumers.

Shortly after, authorities shut down Ant’s planned initial public offering (IPO) in Hong Kong and Shanghai, which was set to raise more than US$30 billion in the biggest stock market debut in history.

At the time, the halt was blamed on “changes to the financial technology regulatory environment and other major issues,” but analysts interpreted the sudden suspension as a warning to Jack Ma, the founder of both Alibaba and Ant, who had publicly criticized regulators in a speech just weeks before the IPO.

In December, China’s top market regulator announced that it was fining Alibaba and China Literature, Tencent’s e-book spinoff, for failing to report their past acquisition deals for clearance.

That same month, regulators met with executives of Alibaba and five other major Chinese Internet companies and warned them not to abuse their dominance to drive out competitors through use of exclusive contracts, predatory pricing and other tactics.

On December 24, 2020, China’s State Administration for Market Regulation announced that it had launched an antitrust investigation into Alibaba for possible monopolistic practices. The regulator said in a statement that it was acting on reports that Alibaba was pressuring merchants who sell goods on its platforms to commit to not selling on competing platforms.

In 2019, Galanz Group, the world’s largest microwave-over maker, accused Alibaba of directing traffic away from its store after it started selling on rival site Pinduoduo. JD and Pinduoduo, both backed by Tencent, have also sued Alibaba for similar behavior, alleging the company abused its dominant position to prevent merchants from selling on their platforms.

Featured image credit: Screengrab from Youtube