China's fast-moving campaign to curb the power of internet giants has hit its latest mark: Ant Group, the fintech sister company of the e-commerce behemoth Alibaba.
Ant announced on Monday that it would undertake a government-ordered overhaul of its business to allay regulators' concerns about the way it competes with rivals, its large-scale collection of user data and the risks its business may pose to the wider financial system.
Beijing has made the corporate empire of Jack Ma, Alibaba's billionaire co-founder and Ant's controlling shareholder, an early major target as it dials up its scrutiny of big technology companies. Chinese officials forced Ant to call off its blockbuster initial public offering in November, mere days before its shares had been expected to debut. On Saturday, China's antitrust authority fined Alibaba $2.8 billion for abusing its dominance in digital retail -- a record penalty for violations of the country's anti-monopoly law.
Ant's flagship Alipay app has become an indispensable tool for more than 700 million monthly users in China, helping them pay for lunch, stash away savings and shop on credit. But Alipay's size and influence put Ant at the center of a swirl of concerns for Beijing, including the power of leviathan web platforms, the role of internet technology in finance and the influence of moguls like Ma at a time when China's leader, Xi Jinping, is seeking greater state control over the economy.
As part of what both Ant and Chinese officials called a "rectification plan," the company said Monday that it would apply to become a financial holding company, which would bring closer supervision and requirements that it hold onto more money that it might otherwise lend or put to profitable use.
Ant said it would also "return to its payment origins." Alipay started out nearly two decades ago as a payment service for Alibaba's shopping platforms. But as Ant has come to offer other financial services within Alipay, the app has become a major vehicle in China for consumer credit and small-business loans as well.
The company also said it would strengthen security protections for the personal information it collects to prevent abuse.
"Under the guidance of financial regulators, Ant Group will spare no effort in implementing the rectification plan," the company said in a statement. "Using the rectification as an opportunity, Ant Group will reinforce our commitment to serve consumers, small businesses and the real economy."
Ant has tangled with Chinese regulators for years as its operations have grown. Officials restricted the company's expansion in certain areas and beefed up supervision. The fact that Ant could even prepare for an IPO last year was taken, at the time, as a sign of a detente.
Now, the authorities' more forceful hand in the company's future could dampen Ant's appeal to investors if it tried to go public again.
Andrew Collier, the founder and managing director of Orient Capital Research, said the new regulatory framework for Ant could prove more damaging to its bottom line than the antitrust fine would be to Alibaba's.
Much will depend, Collier said, on how the restructuring plan is put in place. "The devil is in the details," he said.
China has only recently joined the United States and European Union in looking for ways to rein in internet giants. Regulators in all three places now share roughly similar concerns about unfair competition, the collection and storage of data and tech companies' influence over large segments of national economies.
Ant and other companies, including Tencent, operator of the popular WeChat messaging app and payment platform, have helped bring China to the global forefront of digital finance. But they have also weakened the influence that government-owned banks and other institutions long enjoyed in shaping capital flows.