China’s central bank issued a paper on February 5, saying that data from large Internet platforms should be included in the management.
The Central Bank of China issued a paper on Feb. 5 saying that data from large Internet platforms should be included in macro-prudential management. And these are the most important assets of Internet companies. It is reported that Ant Group plans to divest its consumer credit data business and concede to financial regulators in order to restart the listing process.
According to the article released by the Central Bank of China, data from large Internet platforms should be incorporated into macro-prudential management and regulated accordingly according to public product providers; monopolistic information from influential large Internet platforms should be integrated and incorporated into credit services and credit supervision in an orderly manner.
This op-ed by the subject group of the Bureau of Financial Consumer Protection of the Central Bank of China also indicates that the financial business of large Internet platforms will be fully incorporated into regulation and the comprehensiveness and transparency of business information disclosure will be enhanced.
The article emphasizes that the scope of institutions with access to the basic database of financial credit information will be further broadened, and all institutions engaged in lending business will be connected to the database and the full amount of data on lending business will be reported. “The overall situation of consumer financial information protection on large Internet platforms is not optimistic, especially some head Internet platforms have some problems and controversies in terms of format clauses, information collection and use, and marketing and publicity.”
Previously Beijing authorities have continued to take repressive measures against Internet companies such as Alibaba Group and Ant Group in the name of anti-monopoly, and now the financial regulator is preparing to let Internet companies share consumer credit data. In addition to controlling finance, the authorities also want to monitor the public without any dead ends.
Large Internet companies are often reluctant to share data because consumer data is each company’s most critical asset, helping them run their daily operations, manage risk and attract new customers.
Industry insiders say this business is seen as a “cash cow,” meaning it can generate a steady stream of cash for companies. These companies charge banks high fees for their services by providing channels to connect with millions of customers who use proprietary data. The official move will hit the scale and profitability of Internet companies.
According to Ant Group’s previous prospectus, it collects data on more than 1 billion individual users and more than 80 million merchants through its Alipay.
And Ant Group’s Sesame Credit, China’s largest private credit rating platform, uses proprietary algorithms to score people and small businesses based on their use of Ant Group-related services. And it enables about 100 banks to issue loans to consumers, but provides limited information on borrowers and charges fees for technical services, which leads to lower profits for banks.
According to China’s central bank, Ant Group’s consumer credit balance was RMB 1.7 trillion at the end of June last year, accounting for 21 percent of short-term consumer loans issued by bank-type financial institutions.
And officials have revealed the intention of the above new regulatory measures.
On January 11, Zhang Gong, director of China’s State Administration of Market Supervision and Administration, said in an interview with China Central Television (CCTV) that it should perform its anti-monopoly and anti-unfair competition duties, pay close attention to new trends and issues emerging in the market, and guard against the risk of disorderly competition caused by some enterprises with data, technology and capital advantages.
In December last year, the Political Bureau meeting of the CPC Central Committee for the first Time explicitly proposed “strengthening anti-monopoly and preventing disorderly expansion of capital”, and the subsequent Central Economic Work Conference listed this as one of the eight key tasks in 2021, while fintech giant Ant Group was interviewed by the Chinese central bank and other financial regulators, and the General Administration of Market Supervision also imposed “two-for-one” on Alibaba The General Administration of Market Regulation (GAMR) also opened a case against Alibaba Group for alleged monopolistic practices such as “two-for-one”.
According to a Feb. 4 report by Reuters, people familiar with the matter said Ant Group gave in to financial regulators and plans to divest its consumer credit data business, which would help the fintech group restart its IPO (initial public offering).
Data on more than 1 billion people is a huge asset, the sources said, adding that divesting the business is a key part of Ant Group’s response to financial regulators’ request to restructure its business.
Divesting the consumer data business while Ant Group becomes a more tightly regulated holding company would mean the Alibaba Group affiliate could relaunch its IPO within two years, two other people with knowledge of the situation said.
Ant Group agreed with financial regulators on a restructuring plan to reorganize all its businesses into a financial holding company, Bloomberg reported Feb. 3. The restructuring plan will likely be formally released to the public next week before the Chinese New Year.
Ant Group members were scheduled to make a more than $37 billion IPO in November last year on the eve of a joint interview with Jack Ma, the de facto controller of Ant Technology Group, and others by China’s central bank and four other departments, and Ant Group eventually announced it was putting the IPO on hold.
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