As Jack Ma Gives up Ant Control, the Super App Now ‘Belongs’ to the Government

The government gets the super app — at least in China — and a fulcrum upon which it can shape the nonbank financial services ecosystem.

After all, as Alipay goes, so goes much of consumer payments in China. And now, by extension, the path is made ever clearer for the digital yuan. For innovation and the digital innovators, the path is made less clear — in fact, downright murky.

To that end, and as reported by The Wall Street Journal (WSJ) Thursday (July 28) via unnamed sources, Jack Ma will be giving up control of Ant Group.

How it all transpires has yet to be seen, but Ma’s ceding of control would come nearly two years after regulators scuttled what would have been a $34 billion initial public offering (IPO).

Read more: Ant Group IPO Delay Costs Alibaba Billions In Value As Stock Drops

And over the last several months, Chinese authorities have been busy reshaping the company, where Ant would be transformed into a financial holding company that would in turn be more fully governed by China’s central bank.

Ma apparently will be transferring at least some of his voting rights to other executives.

As noted in separate PYMNTS coverage, Hangzhou Yunbo, an investment vehicle for Ma, has control over two other entities that own a combined 50.5% stake in Ant Group. Ma has a 34% stake in Hangzhou Yunbo, with the other 66% split between Ant CEO Eric Jing, former CEO Simon Hu, and veteran Alibaba executive and former Ant nonexecutive director Fang Jiang.

See more: Billionaire Entrepreneur Jack Ma Could Relinquish Control of Ant

Now, the mechanics of voting rights and who owns what might seem a bit like “inside baseball” — financial maneuvering, you might say. There’s evidence of more changes being wrought at the highest levels of the company, as this week the company said that seven executives had left the Alibaba Partnership.

The news of Ma’s actions has been out there for some time, but the fact remains that the government now can determine the destiny of the super app, at least in China, by forcing the restructuring. The restructuring, in part, hinges on the tweaking of ownership/control, and Ant’s ability to even operate in China hinges on the restructuring.

As for the government’s power over the company: Amid the management reshuffling, there’s a long waiting period, WSJ reported, before the company can apply to go public again. A few years, in fact.

In the meantime, that leaves lots of time to refashion the company, by pressure or by edict.

In one example, last month Jack Ma’s Ant Group was given the go-ahead to start operations at its consumer finance company — Chongqing Ant Consumer Finance. The newly licensed arm is the nucleus of Ant’s restructured lending business, according to a notice from the China Banking and Insurance Regulatory Commission. Chongqing Ant Consumer Finance can issue consumer loans, borrow from banks and issue bonds. Beyond those efforts, there’s also insurance and advisory services in the mix, along with the credit services Huabei and Jiebei, currently used by almost 500 million people in China.

See more: Ant Group Gets Green Light For Consumer Finance Operations

In this way, putting guardrails in place on various financial structures, the super app gets a super-annotated roadmap, with constant input from government bodies.

There’s some evidence that the digital yuan will be part of the super app, no matter which companies are behind those platforms’ expansions. As reported earlier this year, Tencent’s WeChat, China’s largest messaging app, said it will begin accepting the central bank digital currency (CBDC) through WeChat Pay, in addition to having Alipay availability.

The readiness is there for the super app. Although not touching on China, PYMNTS’ recent research shows that more than two-thirds of consumers in countries such as Australia, Germany and the United Kingdom want a digital front door through which to navigate a slew of daily financial and commerce-related activities.

Read more: 72% of Consumers Interested in Super Apps

Within China’s own financial services ecosystem, there’s a seismic shift afoot. Innovation can be shaped to the government’s desire in what would be a drawn-out process, but which touches on the very composition of the corporate boardroom. Pressure gets results over the long term, and Ant Group’s continuing, seemingly endless retooling is but one high-profile example.