Beijing [China], July 9 : Chinese authorities imposed a fine of nearly USD 1 billion for the financial technology giant Ant Group on Friday, nearly three years after regulators blocked the company's proposal for a record-breaking public offering, which launched a period of intensified government scrutiny of technology firms, The New York Times (NYT) reported.
A period of stringent regulation for the industry is coming to an end with the announcement of the penalties by China's top securities regulator, which is considered a hint that the authorities are closing up their inquiries into technological companies. Officials said this year that they would begin to relax their control over tech companies. Following the crackdown on Ant in 2020, its sister company Alibaba, received a record antitrust penalty of USD 2.8 billion, while Didi, a ride-hailing company, received a USD 1.2 billion fine.
The Chinese authorities fined Ant and its subsidiaries USD 985 million and ordered the company to shut down its crowdfunding platform for medical costs, Xianghubao. The regulators have also announced a switch in their focus, as "most of the prominent problems in the financial business of technology giants have been rectified", as per NYT.
In a statement, Ant Group said it "has been conducting business rectification proactively since 2020 and would comply with the terms of the penalty in all earnestness and sincerity."
Ant, one of the biggest online financial tech companies in the world, was founded in 2014. Chinese regulators stopped Ant's massive IPO in November 2020 only days before it was scheduled to raise an estimated USD 34 billion in Hong Kong and Shanghai, in what was anticipated to be the largest IPO ever.
Chinese officials gave Ant one month to revamp its business. At the time, Ant was deemed to have been "indifferent" to the law by the People's Bank of China, the country's central bank. The company was given orders by the central bank to increase transparency, strengthen corporate governance, and create a holding company, according to NYT.
After Jack Ma, the billionaire founder of Ant, publicly criticised Chinese regulators in 2020 for limiting innovation and being unduly conservative, the probe against Ant got underway.
Ma, the prominent Chinese IT entrepreneur, then disappeared from the public eye.
This year, Ant Group announced that Ma would give up ownership of the company. At about the same time, the Chinese central bank announced that its regulatory battle against Big Tech was almost complete. After spending a significant amount of time abroad, Ma recently returned to mainland China, sparking rumours that he would take on a more significant position at Alibaba. In a shake-up last month, two seasoned executives who assisted Ma in founding Alibaba were given the reins of the company.
Alibaba Group said in March that it would transform into a holding company and restructure into six distinct business groups, each with its own CEO and board of directors. By making this choice, the units could be able to execute successful IPOs and allay Beijing's worries about the internet giant's growing strength and influence, The New York Times reported.
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