China has launched an anti-monopoly investigation into Alibaba, regulators said Thursday, heaping further pressure on the e-commerce giant and sending its share price tumbling.
Regulators will also hold “supervisory and guidance” talks with Alibaba’s gigantic financial services subsidiary Ant Group, state media reported, only weeks after its record-breaking IPO was halted at the last minute by Beijing.
The moves demonstrate mounting state pressure on one of the country’s most influential companies, whose success revolutionized the e-commerce landscape and made its founder Jack Ma China’s richest man.
Investigators are looking into Alibaba for “suspected monopolistic practices,” the State Administration for Market Regulation said in a statement.
Alibaba shares tumbled 8% on the Hong Kong Stock Exchange.
Its financial services subsidiary Ant Group said in a statement that it would “diligently study and strictly comply with regulatory departments’ requests.”
Ant Group made its name via its main product Alipay, the online payments platform and super-app that is now deeply embedded in China’s economy.
But the company has also expanded into offering loans, credit, investments and insurance to hundreds of millions of consumers and small businesses, spurring fear and jealously in a wider banking system geared more for supporting state policy and large corporations.
As global demand for the dual Hong Kong-Shanghai listing pushed the IPO toward record valuations – potentially handing Ma and Ant Group even more funding, legitimacy and clout – Chinese regulators acted.
The outspoken and charismatic Ma had previously lashed out at China’s outdated financial system, calling state-owned banks “pawn shops” in an October speech that led to him being summoned for regulatory talks shortly before Ant’s IPO was suspended.
This year, Beijing has also implemented new regulations to contain potential risks in China’s growing online lending industry, as the fintech arms of internet firms including Alibaba and Tencent have expanded and consolidated power over the market.
State media have repeatedly called for tighter oversight of these firms, warning of potential financial instability as a result of their unregulated rapid growth.
“This is an important measure for our country to strengthen anti-monopoly supervision in the internet sector, which is conducive to … promoting the long-term and healthy development of the platform economy,” said a Thursday commentary in the state mouthpiece People’s Daily.
Bad debt in China’s chaotic financial system is a perennial risk, and regulators launched a crackdown on a growing nationwide credit addiction three years ago owing to fears of a financial meltdown.