Seismic shocks ahead for Big Tech loom — certainly in China, and almost certainly for firms here in the US Bloomberg reported on Friday (March 12) that Tencent and Baidu have been censured by the nation’s antitrust regulators. Tencent and Baidu have been fined 500,000 yuan each for past acquisitions and investments. The Wall Street Journal has reported that Alibaba may be fined more than the $975 million that Qualcomm paid six years ago.
Fines are one thing. Wholesale restructurings are quite another. And the net, it seems, is only being cast wider. And while Tencent (and Baidu) are seemingly newly targeted in regulators’ crosshairs, ground zero for the charge against Big Tech was, and is, of course, Ant Group.
As reported last year, Ant had been gearing up for a massive initial public offering (IPO), slated to be in the tens of billions of dollars. Then the regulators came knocking. The IPO was delayed. (Most recently, Simon Hu has resigned as chief executive officer of Ant Group.)
That kicked off a continuing conversation about just how far reaching Big Tech should reach, and as Bloomberg reported recently, Ant has been required to set up a financial holding company that will include banking, insurance and payments operations.
The overall goal, it seems, may be to cool off a sector that has been afire, where oversight has been signaled explicitly, specifically aimed at FinTechs and financial services. Antitrust investigations in China have been picking up steam, where Alibaba Group has been under scrutiny.
For the payments sphere, radical changes may come with radical restructuring. Ant, of course is tied to Alipay, Tencent to WeChat Pay. Hundreds of millions of users, globally, are tied to both. For Tencent the repercussions may be onerous ones, as FinTech and payments make up nearly a quarter of the top line.
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.