China punishes Alibaba and Tencent severely

As part of a regulatory crackdown that started a few years ago, China has imposed severe fines on Tencent and Alibaba, the two largest digital payment companies in the nation.

The People’s Bank of China has fined Tencent and its payments division Tenpay around 2.99 billion yuan ($410 million).

According to Tencent, the People’s Bank of China informed it of its intention to sanction Tenpay “for its past regulatory breaches in relation to the provision of payment services in mainland China” in the sum of about 2.99 billion yuan.

The firm stated in a statement that it “believes the financial regulators will focus on normalised regulation going forward, implementing financial policies and measures to promote the healthy development of the platform economy, and supporting and encouraging platform companies to continue their efforts in financial inclusion.”

Tencent stated that the decision “does not have any material adverse impact on the operations and financial position of the Group as a whole,” as Tenpay has finished its self-inspection and related rectification work and improved its operational compliance capability.

A 7.123 billion yuan ($1.1 billion) punishment was also imposed by China’s central bank for Ant Group, Alibaba’s fintech subsidiary.

Ant Group received a fine “for a range of illegal activities, including those concerning corporate governance, consumer protection, banking and insurance, payments and settlement, anti-money laundering practises, and fund sales,” according to TechCrunch.

Initial public offerings (IPOs) or other forms of funding will be investigated by each of the six business segments that will make up the Chinese digital behemoth Alibaba, according to rumours that appeared in March.

Alibaba’s share price dropped by billions as a result of Beijing’s stricter regulations and the faltering domestic economy over the previous two years.

According to Alibaba, “the move is intended to unleash shareholder value and foster market competitiveness.”

Jack Ma, the founder of Alibaba, has made a few public appearances this year after going years without being seen. Since attacking China’s banking regulators in 2020, he has maintained a quiet profile.

China cancelled Ant’s initial public offering, which would have been the biggest IPO in history, in late 2020.