China fines Ant Group almost $1 billion

The People’s Bank of China announced a fine for the Chinese fintech company Ant Group (part of Alibaba) in the amount of 7.1 billion yuan ($984 billion), reported on the regulator’s website.

“The Department of Financial Regulation imposed fines (including confiscation of illegal proceeds) on Ant Group and its subsidiaries in the amount of 7.123 billion yuan,” the report said.

Ant Group and its subsidiaries, the authorities believe, committed violations in the field of corporate governance, protection of the rights of consumers of financial services, participation in the commercial activities of banking and insurance institutions, making payments and settlement operations, etc.

In addition, the regulator ordered Ant Group to cease operations of its Xianghubao medical care crowdfunding service and pay compensation to users.

The regulator noted that it had previously imposed fines on the Postal Savings Bank, Ping An Bank, as well as a number of insurance companies.

Alibaba got into trouble after founder Jack Ma publicly criticized Chinese authorities in October 2020. Then he said that financial regulators are stifling innovation, which leads to a slowdown in economic growth, and Chinese banks continue to work like pawnshops. As a result, just a month later, the same regulators stopped the record-breaking IPO of Alibaba’s Ant Group on the Shanghai and Hong Kong stock exchanges due to “changes in the conditions of financial and technical supervision” (Alibaba planned to raise up to $37 billion). After that, the Central Bank of China initiated the reorganization of Ant Group.

How notes Reuters, one of the largest fines in the history of the Internet market in China, completes a years-long overhaul of the regulatory framework. Thanks to him, the company will be able to obtain a license for a financial holding and return to plans for an IPO. For the tech sector as a whole, this marks the end of Beijing’s “tough crackdown” on large private companies that began with the derailment of Ant Group’s IPO, the agency said.

On April 10, 2021, the PRC authorities announced that Alibaba will be fined a record $2.78 billion for violating antitrust laws. In January 2023, the Chinese government tightened its grip on Alibaba by buying a “golden share” in its subsidiary, Guangzhou Lujiao Information Technology. As the FT wrote, this will give the country’s authorities special rights to participate in the management and control of content distributed by its companies.