On Monday, Bloomberg reported that in the regulatory crackdown of the last three years, which followed Jack Ma’s criticism of the Chinese government, Chinese tech giants Ant Group and Alibaba saw billions in market value evaporate according to calculations the outlet performed, using market data.
The regulatory crackdowns saw both companies undergo rigorous investigations over alleged violations of anti-monopoly laws. The investigations began following comments by Ma at an October 2020 speech, in which he said the the regulatory environment in China’s financial system was stifling innovation, and accused Chinese banks of operating with a “pawnshop” mentality.
The report found that Ant Group, the fintech giant which fields the popular payment app Alipay, saw 75% of its value lost, leaving it with a present market capitalization of roughly $78.5 billion compared to a value prior to Ma’s statements of $315 billion, in 2020. In addition, it was forced to abort what had been poised to be the largest IPO in history, when Beijing announced it was called off, pending the results of the investigation.
Meanwhile another company co-founded by Jack Ma, e-commerce giant Alibaba, lost 45% of its market capitalization, dropping $620 billion in value since 2020.
Together, the companies lost a collective $856 billion. The valuation hit also affected the net worth of Ma, causing it to fall from roughly $61 billion in October of 2020 to $34.1 billion as of last Monday, according to the figures from Bloomberg’s Billionaire’s Index.
The regulatory probe resulted in a record $2.8 billion fine for violations of antitrust regulations for Alibaba, and a forced reorganization of its business model. The company agreed early this year to split its business into six different units.
China’s central bank imposed an almost $1 billion fine on Ant Group earlier this month. Regulators have been seeking to persuade Ant Group to separate itself more from both Ma and Alibaba, and embrace a more traditional type of financial organization, regulated by the central bank.
Ma announced earlier in the year he would cede controlling rights in the company. For its part, Ant pledged to adjust, “the upper-tier shareholding structure,” such that Ma will be left with only a roughly 6.2% share of the company’s voting rights. Analysts believe the fine imposed on Ant will mark the end of the regulatory crackdown on the company.
Kendra Schaefer, a partner at Beijing-based consultancy Trivium China, said, “The companies have done their mea culpas and the punishments are over – at least for this series of issues.”
