Chinese authorities announced a fine of nearly $1 billion for financial technology firm Ant Group on Friday, nearly three years after regulators halted the company’s plan for a record-breaking public offering that ushered in a period of intense government scrutiny of technology firms.
The fine announced by China’s top securities regulator is seen as a sign that the authorities are wrapping up investigations into technology firms, bringing to a close a period of tough regulation for the industry. Officials said earlier this year that they would start to relax oversight of tech firms. The 2020 crackdown on Ant was followed by a record $2.8 billion antitrust fine for e-commerce giant Alibaba, Ant’s sister company, and a $1.2 billion penalty for ride sharing service Didi.
Regulators fined Ant and its subsidiaries 7.1 billion renminbi ($985 million), and ordered the company to shut down its crowdfunding platform for medical costs, Xianghubao. Regulators also announced a shift in their focus, because “most of the prominent problems in the financial business of technology giants have been rectified.”
Ant Group said in a statement that it “has been conducting business rectification proactively since 2020” and that it would “comply with the terms of the penalty in all earnestness and sincerity.”
Ant, founded in 2014, is one of the world’s largest online financial tech companies. In November 2020, Chinese authorities halted Ant’s blockbuster initial public offering days before it was set to raise an estimated $34 billion in Hong Kong and Shanghai in what was expected to be the world’s biggest I.P.O.
A month later, Ant was ordered by Chinese regulators to revamp its business. The People’s Bank of China, the country’s central bank, said at the time that Ant had been “indifferent” to the law. The central bank ordered the company to improve transparency, bolster corporate governance and establish a holding company.
The investigation into Ant came after its founder and billionaire entrepreneur, Jack Ma, publicly criticized Chinese regulators in 2020 for stifling innovation and being overly cautious. Then, Mr. Ma, the most prominent Chinese tech entrepreneur, disappeared from the public eye.
Earlier this year, Ant Group said Mr. Ma would give up control of the company. Around the same time, the China’s central bank said that it was nearly finished with its regulatory campaign on Big Tech. Mr. Ma’s recent reappearance in mainland China after spending much of his time overseas has drawn speculation that he may return to a bigger role at Alibaba. Last month, in a shake-up, two longtime executives who helped Mr. Ma found the Alibaba were put in charge of the company.
Alibaba Group said in March that it would become a holding company and restructure the group into six different business units with their own chief executive and board of directors. This decision may help the units complete successful I.P.O.s and also ease Beijing’s concern over the tech giant’s concentration of power and influence.
Ant’s estimated value was cut to about $63.8 billion from $235 billion before its I.P.O. was halted by Chinese authorities in November 2020, according to Bloomberg.