China’s Ant Group, an affiliate of the giant e-commerce platform Alibaba, was slapped with a nearly $1 billion fine by the country’s top securities regulator on Friday in what is seen as a sign that Beijing is wrapping up its crackdown on powerful technology firms.
The fine came nearly three years after the Chinese authorities halted the company’s record-breaking initial public offering, which prompted a string of intense government regulations against tech firms.
The latest penalty to be imposed on Ant Group, founded by the billionaire Jack Ma, was 7.1 billion renminbi (nearly $985 million), imposed by the People’s Bank of China in response to “violations of laws and regulations related to financial consumer protection, payment and settlement business and anti-money laundering requirements.”
The firm was ordered to shut its crowdfunding platform for medical costs, Xianghubao. The People’s Bank of China said at the time that Ant had been “indifferent” to the law and had to improve transparency, bolster corporate governance and establish a holding company in response to the penalties.
The official statement also noted the authorities’ shift in focus to rectifying existing problems, noting that “most of the prominent problems in the financial business of technology giants have been rectified.”
In response, Ant Group said in a statement that it “has been conducting business rectification proactively since 2020” and would “comply with the terms of the penalty in all earnestness and sincerity.”
Shares for Alibaba—which owns a 33% stake in Ant Group—rose over 6% as of 10 a.m. on Friday. Louis Tse Ming-Kwong, managing director of Hong Kong-based Wealthy Securities, noted the penalties could ‘pave the way for Ant to consider listing again.”
The hefty fine is the latest in a line of penalties imposed on Chinese tech firms, including Meituan and Didi, which were hit with hefty fines of $534 million and $1.19 billion respectively.
The investigation into Ant Group began after its founder and billionaire entrepreneur, Jack Ma, publicly criticized Chinese regulators in 2020 for stifling innovation and being overly cautious. Ma then disappeared from the public eye, reemerging in Tokyo with his family in November 2020.
A month later, Chinese regulators ordered Ant Group to revamp its business and the billionaire entrepreneur announced he would step down from the company.
Around the same time, China’s central bank said it was nearly finished with its regulatory campaign on Big Tech. Last month, in a shake-up, two longtime executives who helped Ma found Alibaba were put in charge.
Alibaba Group announced in March that it would become a holding company and restructure the group into six different business units with their own chief executive and board of directors, viewed as a move to enable successful I.P.O.s and address Beijing’s concern over tech giants’ growing power and influence.
Ant Group’s estimated value has since dropped to $63.8 billion from its once estimated $235 billion before Chinese authorities halted its I.P.O. in November 2020, according to Bloomberg.
The hefty fine and statements from regulators to “rectify existing problems” indicate the Chinese government is ready to move past the process of tackling technology firms. As Ant Group presses forward with its rectification efforts, the giant tech firm is certainly hoping this signal leads to brighter days ahead.