Alipay: China’s biggest payment app faces new curbs
China has reportedly ordered Ant Group, the owner of the world’s biggest payment platform Alipay, to create a separate app for its flourishing microloan business.
The Financial Times (FT) on Monday cited a person familiar with the plan who said it was part of Beijing’s push to rein in the “unruly growth” of the country’s tech giants.
Alipay has more than a billion users in China and other Asian nations. It operates two lending units: Huabei (just spend) — a virtual credit card and Jiebei (just borrow) — offering small loans for up to 12 months.
Chinese regulators have already ordered Alipay to spin off the two lenders. According to the FT, the government now requires the two lenders to operate on an independent app.
Lending data must be shared
Alipay will also have to hand over data used to make its lending decisions to a new credit scoring joint venture that is partly state-owned, two sources familiar with the arrangement told the FT.
Huabei and Jeibei sit within Alipay’s CreditTech unit, which in the first half of 2020 accounted for 39% of the group’s revenues. The unit issues about one-tenth of nonmortgage consumer loans in China last year.
Alibaba shares closed down 4.2% in Hong Kong trading on Monday.
Alibaba hit hard
The order is the latest in a far-reaching crackdown on Chinese tech firms, which Beijing says have quickly turned into huge monopolies. Regulators have hit Ant Group and its Alipay and Alibaba units hard.
In November, regulators pulled the plug on the fintech conglomerate’s record $37 billion (€31.4 billion) stock market launch, after founder Jack Ma criticized officials for stifling innovation.
Billions of dollars have been wiped off the value of Ma’s business empire, and the outspoken entrepreneur has largely remained out of the limelight ever since.
Companies under the Ant Group banner have continued to face heat from regulators, over issues ranging from their use of algorithms to consumer privacy and worker protections.
E-commerce platform Alibaba was also fined $2.75 billion for abusing its market dominance, and on Monday was ordered to stop blocking links to rival services.
Tech giants’ shares lose billions
The crackdown has also ensnared sectors from technology to education to property, wiping hundreds of billions off the market capitalizations of some of China’s largest companies.
Tencent Holdings, the country’s biggest gaming and social media firm, was fined for failing to report past deals to antitrust regulators, with a $5.3 billion plan to merge China’s top two video game streaming sites being blocked. It has been barred from entering into music copyright agreements.
The tech giant has also been affected by China’s latest efforts to combat gaming addiction among minors. In August, people under 18 were banned from playing video games for more than three hours per week.
Tencent’s shares have lost more than HK$2.7 trillion ($347.13 billion, €294 billion) in market value since they reached an all-time high in mid-February.
Smaller platforms not immune
China’s largest ride-hailing app Didi became the target of a cybersecurity investigation days after its New York initial public offering in June. Regulators ordered the software be removed from Chinese app stores and barred it from registering new users.
Food delivery company Meituan became the target of an antitrust probe in April, and courted controversy a month later when its founder and chief executive posted an ancient poem on social media that was perceived by some as criticizing President Xi Jinping.
In July, China issued new rules barring for-profit tutoring on school curriculum topics, to reduce the financial burden on parents and ultimately bolster flagging birth rates. The shares of the largest provider of private educational services plummeted in response.
Source: dw.com