By Arghyadeep Dutta, 1:00 pm ET:
Shares in Alibaba Group Holding Ltd plunged again on Monday after the Financial Times reported that the Chinese government is planning to break up Alipay, the financial super-app owned by Jack Ma’s Ant Group, as it controls more than half of the mobile payments market in China.
Investors are also worried about the ongoing crackdown on major tech corporations as Beijing also announced new regulation ordering internet firms, including Alibaba, to stop the practice of blocking rivals’ links on each other’s platforms.
Although Ant Group spun off from Jack Ma’s Alibaba in 2011, Alibaba still holds one-third of the total stake of the fintech company.
Alibaba fell by more than 3% in New York on Monday morning. The stock has shed about 49% since the last week of October 2020, when Chinese regulators halted Ant Group’s mega IPO, in which the company planned a dual listing in Shanghai and Hong Kong, at the last minute.
The disruption in the listing erased about $380 billion off Alibaba’s market value.
Earlier, Chinese regulators have ordered Ant to restructure as a financial holding company; however, on Monday, the Financial Times reported that Beijing wants to break up Alipay and create a separate app for its loans business, citing people familiar with the matter.
The report said that Ant Group was already ordered to separate the back end of its two lending businesses, Huabei, which is similar to a traditional credit card, and Jiebei, which makes small unsecured loans, and the regulators now want the two businesses to have independent apps as well.
After a decade of unchecked growth, Chinese authorities are cracking down on the tech industry and its influence on the country’s economy, and the process of breaking up will also require Ant to turn over the user data that supports its lending decisions to a new and separate credit scoring joint venture that will be partly state-owned, the report said.
Picture Credit: Forbes