Ant Group, the online finance company of Chinese e-commerce giant Alibaba, announced a major overhaul of its business on Monday to respond to calls from the Chinese government as it is swiftly seeking to contain the power of the country’s internet giants.
Beijing’s campaign made the corporate empire of Jack Ma, Alibaba’s billionaire co-founder and majority shareholder, an early target. On Saturday, China’s antitrust authorities fined Alibaba $ 2.8 billion for abusing its dominance in digital retail – a record amount for violating the country’s antimonopoly law.
As part of what both the Ant Group and Chinese officials referred to as the “rectification plan,” the company said Monday that it would seek the establishment of a financial holding company, which would bring closer surveillance and demands for more money than it could otherwise lend or use it profitably.
Ant also said it would change the way personal information is collected and used to improve data security and prevent misuse. And it said it would improve corporate governance to better comply with fair competition rules.
“Under the guidance of the financial regulators, the Ant Group will spare no effort to implement the rectification plan,” the company said in a statement. “The Ant Group will use the rectification as an opportunity and increase our commitment to consumers, small businesses and the real economy.”
Chinese officials forced Ant to abandon the blockbuster’s IPO last November, just days before its shares were expected to debut. A month later, regulators ordered Ant to correct a so-called litany of errors in their business, which includes a range of financial services, from payments to loans, offered through the Alipay app.
Alipay’s user base of more than 700 million people in China gives Ant a huge impact on the country’s financial system.
China said for the first time last September that companies that own two or more financial companies would need to register as financial holding companies and be subject to increased government oversight. At a press conference at the time, an official from the Chinese central bank named Ant one of several companies that would likely have to restructure under the new rules.
According to official information, the aim is to better monitor the systemic risks that have arisen from the “blind” entry of non-financial companies into the financial sector.