Shares in Alibaba, a Chinese technology giant, have fallen sharply after reports said regulators wanted to break up Alipay, a payments app with more than 1 billion users, that is owned by Jack Ma’s Ant Group.
The Guardian reported that Beijing is seeking to create a separate app for the company’s highly profitable loans businesses, in the latest crackdown on China’s technology sector by the state’s authorities.
It is reportedly said that the Chinese regulators are allegedly concerned at the financial risk building in the economy. In 2020, Alipay’s loans business helped issue about 10% of the country’s non-mortgage consumer loans.
reports further said that the regulators have already ordered Ant Group to separate the back end of its two lending businesses, Huabei and Jiebei, from the rest of its financial offerings.
According to Financial Times, Beijing wants the two businesses to be split into a separate independent app, while also requiring Ant to share user data to a new credit scoring joint venture that would be partly state-owned.
State-owned companies in Ant’s home province, including the Zhejiang Tourism Investment Group, would hold a majority stake in the new joint venture.
On Monday, the news sent shares in Alibaba down as much as 6% in trading as the wider Hang Seng Tech index, which tracks China’s biggest tech groups listed in Hong Kong, fell more than 3%.
Jack Ma, the co-founder of both Ant Group and Alibaba, has become a lightning rod in the crackdown on big tech by Chinese regulators.
Earlier, Alibaba paid a record $2.8 billion fine to settle an investigation by Chinese regulators into anti-competitive practices at the company.
In March, Beijing ordered Alibaba to sell off some of its media assets, including Hong Kong’s South China Morning Post.