According to Bloomberg, after a conflict with Jack Ma's Ant Group, a subsidiary of Alibaba, the Chinese authorities have chosen a new victim - Tencent. China's tech giant has come under increasing pressure from regulators worried about its growing influence. The Chinese regulatory watchdog has recently fined the corporation for antitrust violations.
The government took a hard stance on the company due to the conglomerate's purchase of Yuanfudao, the online educational service, Reuters said. The fine amounted to $77,000, causing a sharp drop in the company's shares on March 12. Tencent stocks plunged by 4.5% with the capitalization falling to $810 billion. Analysts at Bloomberg believe that after having dealt with Jack Ma, China’s government has now tightened its grip on Tencent. Notably, the investigation also showed some problems with the structure of the company. Therefore, Tencent is required to set up separate holding companies to include their banking, insurance, and payments services. No wonder, from now on, the company’s activity will be subject to increased scrutiny of the government.
The conflict between the Chinese authorities and Ant Group broke out in November 2020. The Chinese government banned the company from entering the IPO due to the investigation of possible beneficiaries. Among beneficiaries were allegedly politically unreliable citizens who represented a political challenge to President Xi. In February 2021, Ant Group and Chinese regulators agreed on a restructuring plan that would transform the company into a financial holding firm.
In March of this year, China's antitrust authorities will impose the largest fine in the country's history on Alibaba amounting to $975 million. The company was accused of using fraudulent schemes against competitors.
