The Chinese government is preparing to crack down on what it views as antitrust behavior in the payments sector by tech giants such as Ant Group and Tencent Holdings.
The People’s Bank of China (PBOC) has issued new draft rules that seek to rein in any non-bank company that dominates at least half of the payments market or combination of two companies that dominate at least two-thirds of the market. Remedies would include breaking up offending companies to limit their dominance, according to a Bloomberg report.
Payment companies that already possess state licenses will be given one year to comply with the new regulations.
The PBOC said it also plans to monitor corporate activities such as changes in corporate shareholders or beneficiaries, Bloomberg said.
The move comes in the wake of the abrupt cancellation by Beijing of Ant’s hotly anticipated initial public offering (IPO) in November. Chinese regulators have since ordered Ant to restructure its business and have launched an antitrust probe into its sibling company, Alibaba, Bloomberg added.
On Wednesday, The Economic Times reported that Ant and Alibaba Co-Founder Jack Ma had made his first public appearance since the demise of the Ant IPO, giving a live-streamed video speech to teachers in rural China that echoed many of the Chinese government’s positions on business and prosperity. He added that he and his colleagues would be devoting more of themselves to “education philanthropy.”
The appearance surprised some China watchers.
“Jack Ma’s unexpected re-emergence — just as sudden as his earlier disappearance — is likely a sign that his relationship with Beijing’s regulatory authorities has stabilized,” Brock Silvers, a managing director at private equity fund Kaiyuan Capital in Hong Kong, told The Economic Times. “A path acceptable to all parties may have been identified, but Ant Group still looks likely to be dis-aggregated and regulatory restrictions will almost surely take a significant bite out of Ant’s former valuation.”
In November, China’s State Administration for Market Regulation (SAMR) released draft rules for curbing anti-trust behavior among e-commerce and payment services companies. The Chinese regulator said it was out to prevent companies from engaging in practices that hurt competitors, such as a host company restricting brands from selling on multiple platforms, according to Reuters.
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