Hi all, it’s Zheping in Hong Kong. Jack Ma hasn’t been seen in public for two months. His absence was highlighted over the weekend after he skipped a taping of his own talent show. A person familiar with the matter has said the flamboyant billionaire has been advised by the
Ma’s disappearance from the public eye follows Beijing's sweeping crackdown on tech. China’s massive internet companies got that way with at least tacit support from the government. Now, leaders in the country are losing patience with the outsize power of its tech moguls.
Once hailed as the torchbearers of China’s economic and technological rise, Ma and his compatriots have faced mounting pressure from regulators worried about the speed with which tech giants are amassing clout in sensitive areas like media and education and gaining influence over the daily lives of millions.
In the final days of 2020, Beijing launched its most direct assault yet on the country’s influential corporations after Xi Jinping’s government vowed to root out internet monopoly. The government came down on Ma’s empire the hardest, torpedoing plans for what would have been the largest initial public offering of all time, and imposing new guidelines the government said were aimed at combating monopolistic practices online. Regulators ordered Ma’s sprawling Ant Group Co. to return to its roots as a payments tool and opened an antitrust probe into Ant’s major backer, Alibaba Group Holding Ltd.
Investors, fearing the end of the unusual freedom enjoyed by China’s tech companies, fled. Giants like Tencent Holdings Ltd., Meituan and JD.com Inc. collectively saw their market value drop nearly $290 billion in just two days late last year after regulators unveiled new antitrust guidelines. Skittish investors temporarily drove the stocks down by billions again last week. As of Tuesday, Ma had seen his fortune shrink by $11 billion after Ant’s IPO was called off, ceding his position as the country’s richest person.
Since derailing Ant's IPO, the Chinese government has shown that the enforcement wasn’t a one-off event. China’s antitrust watchdog fined Alibaba and a Tencent unit over a pair of years-old acquisitions and said it’s reviewing an impending merger that Tencent’s leading. It also fined the country’s biggest e-commerce platforms for irregular pricing around their version of Black Friday and placed curbs on the hotly contested market for fresh produce delivery.
China’s fintech sector, where Ant is the biggest player, could feel the greatest impact from the new rules. Regulators are studying plans to force Ant to divest equity investments in some financial companies as part of its required business overhaul, sources have told Bloomberg News. And on New Year’s Eve, the banking watchdog said Ant isn’t its only target. Already, fintech companies in the country have stopped the sales of some of the riskier deposit products offered by their banking partners.
It’s unclear how far Beijing is willing to go with its tech regulation. China's ruling Communist Party prizes political and social stability, and tech companies have eroded its ability to control China’s society. Tencent and TikTok-owner ByteDance Ltd. now have sweeping power over what online content people consume. Alibaba and Ant have a better grasp of people's credit records than state banks. And Didi Chuxing and Meituan deploy armies of drivers and delivery riders across Chinese towns and cities.
But no matter how big they get, recent months’ message is clear: China’s technology titans will always be at the mercy of the party. —Zheping Huang
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