China kicked off an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd. and summoned affiliate Ant Group Co. to a high-level meeting over financial regulations, escalating scrutiny over the twin pillars of billionaire Jack Ma’s internet empire.
The State Administration for Market Regulation is investigating Alibaba, the top antitrust watchdog said in a statement without further details. Regulators including the central bank and banking watchdog will separately summon affiliate Ant to a meeting intended to drive home increasingly stringent financial regulations, which now pose a threat to the growth of the world’s biggest online financial services firm. Ant said in a statement on its official WeChat account it will study and comply with all requirements.
Once hailed as drivers of economic prosperity and symbols of the country’s technological prowess, Alibaba and rivals like Tencent Holdings Ltd. face increasing pressure from regulators after amassing hundreds of millions of users and gaining influence over almost every aspect of daily life in China.
Alibaba’s Hong Kong stock slid as much as 7.7% to a five-month intraday trough, while Tencent and internet services giant Meituan declined more than 1%. Shares in SoftBank Group Corp., Alibaba’s largest shareholder, erased gains to trade as much as 2.7% lower in Tokyo.
The flamboyant Alibaba co-founder has all but vanished from public view since Ant’s initial public offering got derailed. As of early December, with his empire under regulatory scrutiny, the man most closely identified with the meteoric rise of China Inc. was advised by the government to stay in the country, a person familiar with the matter has said.
Alibaba representatives weren’t immediately available for comment.
The country’s internet ecosystem -- long protected from competition by the likes of Google and Facebook -- is dominated by two companies, Alibaba and Tencent, through a labyrinthine network of investment that encompasses the vast majority of the country’s startups in arenas from AI to digital finance. Their patronage has also groomed a new generation of titans including food and travel giant Meituan and DidiChuxing -- China’s Uber. Those that prosper outside their aura, the largest being TikTok-owner ByteDance Ltd., are rare.
The anti-monopoly rules now threaten to upset that status quo with a range of potential outcomes, from a benign scenario of fines to a break-up of industry leaders. Beijing’s diverse agencies now appear to be coordinating their efforts -- a bad sign for the internet sector.
