The Ant Group IPO has been completely revamped by regulators. The overhaul, in the works for several months, includes Ant turning itself into a financial holding firm, a move expected to curb its profitability and valuation by curtailing some of its freewheeling businesses.
It comes two days after Ma’s Alibaba Group Holding Ltd, of which Ant is an affiliate, was hit with a record $2.75 billion antitrust penalty as China tightens controls on the booming “platform economy”.
The overhaul, directed by China’s central bank, subjects Ant to tougher regulatory oversight and capital requirements, and requires it to cut links between its hugely popular payments app Alipay and its other businesses – which had been viewed as a big advantage due to Alipay’s vast trove of customer data.
The Bank of China wants to be sure that abusive business practices are eliminated. Regulators want to eliminate natural monopoly situations as much as possible to prevent long term problems.
- Buying out leading but small entrants to a burgeoning market;
- Burning through cash to grab market share in community group buying;
- Discriminating against certain users based on big data;
- Disregarding counterfeiting on the platform;
- Information leaks;
- Tax-related violations.
Most of the issues have been flagged several times in western media and now authorities are catching up as domestic complaints accumulate. I found so much crap on Alibaba so I stick with fleabay which at least has a mechanism for recovery. 99.9% of the vendors are OK on fleabay as the review system weeds out the bad apples fairly fast.