
The People's Bank of China (PBOC) on Friday imposed a penalty of 7.12 billion yuan ($985 million) on Ant Group, a company affiliated with Alibaba. Last year, the regulators had prevented Ant's blockbuster initial public offering from taking place, and had also demanded the company to change its organizational structure. But there have been indications that the authorities have been more favorable to Ant, as evidenced by the permission granted in January for the company to grow its consumer finance business.
China's central bank issued a 7.12 billion yuan fine ($985 million) to Ant Group, an affiliate of Alibaba, on Friday. The People's Bank of China (PBOC) said that the punishment occurred due to the company's violations of various laws and regulations, including those related to corporate governance, consumer protection, and anti-money laundering. This is one of the biggest fines to have been imposed on a Chinese internet firm, concluding the long-term investigation and restructuring of Ant Group which came about after its $37 billion IPO was scrapped in 2020. This also marked the beginning of Beijing's intense two-year crackdown of China's tech industry, pushing Ant to modify its business by becoming a financial holding company, supervised by the PBOC. Alibaba owns roughly 33% of Ant Group, and is led by Chinese entrepreneur Jack Ma.In January 2021, the company was approved to expand its consumer finance services, which is seen as a sign that it is now on the great side of the authorities.The PBOC said that most of the historical issues related to "platform companies" such as Ant Group have been resolved. Going forward, the PBOC is in charge of "normalized supervision", which implies that fines like the one from Friday will be less frequent.In its statement, Ant Group declared that it will comply with all the terms of the fine and will enhance its compliance governance. There is a strong possibility that the company will pursue a new listing, although its current valuation has dropped significantly since it was first suspended.
Since Ant Group pulled its IPO in November 2020, Beijing has issued stricter regulations for the domestic tech sector in order to control some of the country's major corporations. The sudden changes caught investors by surprise and wiped out billions of dollars in value for Chinese tech firms. Jack Ma's businesses Alibaba and Ant Group were particularly targeted, with the former receiving a substantial $2.8 billion antitrust fine in 2021. After the withdrawal of the IPO, the outspoken billionaire who had been frequently visible in the public eye vanished for several months before resurfacing recently. Apart from Ma's companies, other corporations have also been inspected by Chinese officials. In 2021, Meituan received a 3.44 billion yuan fine in the aftermath of a antitrust investigation; likewise, Didi was penalized 8.02 billion yuan in 2020 for breaching the country's data security legislation.
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