Putting the reins on the horse Foreign media: Beijing wants to shrink Jack Ma’s business empire

Alibaba, founded by Chinese entrepreneur Jack Ma, is facing an antitrust investigation and Ant Group is being interviewed for the second time.

Alibaba, founded by Chinese entrepreneur Jack Ma, is facing an anti-monopoly investigation and Ant Group has been interviewed for the second time, amid speculation that the two companies’ interests are too large and challenge the dominance of the public sector. Foreign media quoted people familiar with the matter as saying that the Chinese Communist authorities are trying to restrain Ma and shrink his business empire, describing it as “like putting a bridle on a horse”.

The Wall Street Journal reported Tuesday (Dec. 29) that Ant Group will have to “return to its payments roots” under a restructuring roadmap announced this week by Chinese financial regulators, a move that threatens to curtail Ant’s most lucrative investment and lending businesses.

Several regulators have asked Ant Group to set up an independent financial holding company that would be regulated like a bank; “that would open the door to a takeover of Ant by a large Chinese state-run bank or other similar government-controlled entity,” people familiar with the matter said.

Currently, the China Social Security Fund, China Development Bank and China International Capital Corporation, China’s largest state-owned investment bank, are all investors in Ant Group. People familiar with the matter also revealed that the Chinese Communist Party is trying to shrink Ma’s tech and financial empire and take as much of a stake in his companies as possible.

The report noted that Ma’s Ant Group and e-commerce firm Alibaba Group “define China’s new economy. The companies’ businesses span payment services, online retail, cloud computing, wealth management and lending; Alibaba, which is under antitrust investigation, could lead to an overhaul of its business and a split of its assets.

The report said the targeting of Ma by Beijing authorities represents a difficult challenge for Communist Party leaders to ensure that they can restrain entrepreneurs like Ma without hurting China’s economy. An adviser to the anti-monopoly committee of China’s State Council said bluntly, “There is no doubt that the aim is to restrain Jack Ma.” The adviser described it as like putting a bridle on a horse.

In addition, the Chinese Communist Party leadership is concerned that the move to fix Alibaba could spark a backlash from international investors. At this stage, the Chinese Communist Party wants to dispel rising doubts about their “commitment to market reform” and to nurture more local Chinese companies like Alibaba that can compete with their American counterparts.

The Ant Group, along with Alibaba, has enabled hundreds of millions of Chinese consumers and businesses to buy, deposit money, and even complete an investment or obtain a loan simply through their cell phones, playing a significant role in China’s economy and nearly challenging the public sector’s dominance in areas like banking and wealth management.