Ant Group fined $985 million by Chinese regulators in signal that tech crackdown may end

HONG KONG (AP) — Chinese regulators are fining Ant Group 7.123 billion yuan ($985 million) for violating regulations in its payments and financial services, an indicator that over two years of scrutiny and crackdown on the firm that led it to scrap its planned public listing may have come to an end.

The People's Bank of China imposed the fine on Friday, stating that Ant had violated laws and regulations related to corporate governance, financial consumer protection, participation in business activities of banking and insurance institutions, payment and settlement business, and attending to anti-money laundering obligations.

The fine comes over two years after regulators pulled the plug on Ant Group's $34.5 billion IPO — which would have been the biggest of its time — in 2020. Since then, the company had been ordered to revamp its business and behave more like a financial holding company, as well as rectify unfair competition in its payments business.

“We will comply with the terms of the penalty in all earnestness and sincerity and continue to further enhance our compliance governance,” Ant Group said in a statement.

The move is widely seen as wrapping up Beijing’s probe into the firm and to allow Ant to revive its initial public offering. Chinese gaming firm Tencent, which operates messaging app WeChat, also received a 2.99 billion yuan fine ($414 million) for regulatory violations over its payments services, according to the central bank Friday, signaling that the crackdown on the Chinese technology sector could ease.

Alibaba’s New York-listed stock was up over 9% Friday afternoon.

Ant Group, founded by Alibaba co-founder Jack Ma, first started out as Alipay, a digital payments system aimed at making transactions more secure and trustworthy for buyers and sellers on its Taobao e-commerce platform.

The digital wallet soon grew to become a leading player in the online payments market in China, alongside Tencent's WeChat Pay. It eventually grew into Ant, Alibaba's financial arm that also offers wealth management products.

At one point, Ant's Yu’ebao money-market fund was the largest in the world, but regulators have since ordered Ant to reduce the fund's balance.

In January, it was announced that Ma would give up control of Ant Group. The move followed other efforts over the years by the Chinese government to rein in Ma and the country’s tech sector more broadly. Two years ago, the once high-profile Ma largely disappeared from view for 2 1/2 months after criticizing China’s regulators.

Yet Ma’s surrender of control came after other signs the government was easing up on Chinese online firms. Late last year Beijing signaled at an economic work conference that it would support technology firms to boost economic growth and create more jobs.

Also in January, the government said it would allow Ant Group to raise $1.5 billion in capital for its consumer finance unit.