China Ends Crackdown On Web Giants With Colossal Fines For Ant Group, Tencent

China's crackdown on web giants Alibaba and Tencent appears to be over, with the two to pay a combined $1.4 billion in fines to atone for past sins as Beijing moves on to "normalized" supervision.

The Middle Kingdom's Securities Regulatory Commission last Friday announced a ¥7.123 billion ($984 million) fine for Alibaba's fintech operation, Ant Group, and ordered the closure of its health insurance service, Xianghubao. Tencent 'fessed up [PDF] to having received a notification of a ¥2.9 billion ($414 million) fine from the People's Bank of China.

Ant Group was found to have broken laws covering insurance, investments, money laundering, and more. Alibaba had already decided to close Xianghubao. Tencent was fined for failing to properly manage some aspects of its Tencent Pay service.

Beijing's concerns over Ant Group's operations saw it order a last minute cancellation of the Alibaba limb's planned 2020 stock market debut – at the time the world's all-time highest-valued IPO. While Beijing was worried about some of the loan products Ant Group offered, halting the IPO was also seen as retaliation for founder Jack Ma making anti-Beijing remarks.

After the fine was announced last week, Ant announced a new plan to help investors turn their shares into cash: a share buyback of 7.6 percent of its stock. But the buyback is not great news because it values Ant Group at 70 percent less than the sums indicated by the pricing of the aborted 2020 IPO.

• Washington plans to block Chinese access to AI cloud services
• Alibaba plans to spin off cloud division within 12 months
• China's Alibaba Cloud cuts prices in bid to lure customers
• Beijing lists the stuff it wants generative AI to censor

Chinese authorities had previously stated that its rectification campaign regarding 14 platform businesses was "basically completed" with just a few issues to be resolved.

Beijing's announcement of the fines – complete with detail of why they were levied, plus authorities mentioning a return to normalized regulation – suggests China has now addressed those issues and ended its years-long investigation into the power and conduct of its web giants.

But its actions have left a major mark on Alibaba, which has decided to split into six companies and has reshuffled its executive leadership. ®