Chinese tech giants Ant Group and Alibaba have collectively lost over $850 billion in value over the past three years, according to calculations based on market data reported by Bloomberg. This decline in value is a result of the regulatory crackdown that followed co-founder Jack Ma’s criticism of the Chinese government.
The scrutiny faced by both Ant Group and Alibaba was primarily due to alleged violations of anti-monopoly laws. The crackdown came shortly after Jack Ma’s speech in October 2020, where he criticized China’s financial regulatory system for stifling innovation and compared Chinese banks to operating with a “pawnshop” mentality.
Ant Group, known for its popular payments app Alipay, saw a significant loss in value, with a decline of 75% to around $78.5 billion, down from its valuation of $315 billion in 2020. Additionally, Ant Group’s planned IPO, which would have been the largest in history, was canceled by Beijing amid the regulatory probe.
Similarly, e-commerce giant Alibaba, also co-founded by Jack Ma, experienced a 45% drop in market value, amounting to $620 billion since 2020. Collectively, the two companies have seen their valuation plummet by over $856 billion. This decline has also impacted Jack Ma’s net worth, which dropped from around $61 billion in October 2020 to $34.1 billion as of Monday, according to Bloomberg’s Billionaires Index.
Amid the regulatory probe, Alibaba was fined a record $2.8 billion for antitrust abuses and had to reorganize its business model. Earlier this year, the company announced its plan to divide its business into six separate units.
Ant Group faced its own challenges and was hit with a nearly $1 billion fine from China’s central bank this month. Chinese regulators have been pressuring Ant Group to distance itself from Alibaba and Jack Ma and operate more like a traditional financial organization regulated by the central bank.
Earlier this year, Jack Ma relinquished controlling rights of the company, and Ant Group pledged to undergo an “adjustment of the upper-tier shareholding structure.” As a result, Ma was left with only an estimated 6.2% of voting rights. Analysts believe that the central bank’s fine for Ant Group indicates the end of the regulatory crackdown on the company.
Kendra Schaefer, a partner at Beijing-based consultancy Trivium China, believes that the companies have acknowledged their mistakes and that the punishments are over, at least for this series of issues.
The losses faced by Ant Group and Alibaba highlight the impact of regulatory actions on the Chinese tech industry. As both companies work towards regaining investor trust and complying with regulations, their future performance will be closely watched by industry observers.
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