Jack Ma's business empire just suffered a one-two punch as China continues to tighten the screws on its tech champions.
Chinese regulators have ordered Ant Group, which owns the hugely popular Alipay app, to overhaul its operations and become a financial holding company supervised by the central bank. The announcement late on Monday came just days after Ma's online shopping giant Alibaba was hit with a record $2.8 billion antitrust fine.
Monday's news, which had been widely anticipated, means that the Alibaba (BABA)-affiliated company will have to follow rules similar to those required of traditional Chinese banks. Ant Group's financial activities will be highly regulated, and it will likely have to follow new rules governing how much cash it keeps in reserve and how rapidly it can grow.
The overhaul marks a dramatic change from where the financial technology company stood just five months ago, when it was preparing for a record-breaking IPO. That offering was pulled by Chinese regulators days before Ant's public debut and its fate had been uncertain ever since.
Ant Group needs to face up to "serious problems" in its financial activities, said Pan Gongsheng, vice governor of the People's Bank of China, in a statement on Monday that emphasized "the seriousness of its overhaul" and mentioned that company executives had been summoned to speak with financial regulators.