Image depicting Jack Ma
Billionaire Jack Ma plans to cede control of China's Ant Group. Source: The Times of India

Ant Group says Jack Ma relinquishes control of company

On Saturday, one of China’s most influential financial tech companies, Ant Group, said that the billionaire entrepreneur, Jack Ma, planned to relinquish control of the company.

Jack Ma
Jack Ma

Mr. Ma’s retreat from the company he founded comes after the ruling Communist Party waged a sudden and unexpected crackdown on Big Tech. Beijing had made Mr. Ma’s Ant Group and its sister company, Alibaba, the e-commerce giant, the crown jewels of his online empire, became early targets in the campaign to curb the power of internet giants.

The government officials had forced Ant Group to call off what would have been a hit IPO in 2020 and later charged Alibaba a large penalty of $2.8 billion for abusing its monopoly in the market. In 2021, Ant Group said it would undertake a major government-ordered overhaul of its business to address regulators’ concerns about unfair competition and the amount of data it collects on users.

Under China’s top leader, Xi Jinping Beijing has sought to exert greater state control over the economy in recent years, which includes controlling the influence of tycoons who earned enormous wealth but were seen to cross their boundaries.

Once regarded to be a model of success in China, but in recent years he faced much trouble with the Chinese government, especially after he criticized the nation’s banking regulators in late 2019. In recent years, he has largely disappeared from public view.

On Saturday Ant Group said in an announcement that Mr. Ma would no longer be the “control person” who holds 34 percent of the company’s shares. Instead, he would be one of 10 major shareholders.

The announcement, which described the move as part of a “corporate governance optimization” plan, gave no details about when the changes would be finalized, and noted that they would not affect the company’s day-to-day operations.

Jack Ma

Under Ant Group’s current governance structure, Mr. Ma does not have a management role.

The company’s flagship Alipay app is a major portal for more than 1 billion users in China who use it to pay for meals, shop on credit and build their savings. But its influence and size made it a focus of concern for Beijing as the authorities scrutinized the fintech industry for potential risks to the country’s broader financial system. Then, in 2020, shortly before Ant was set to go public, regulators abruptly halted its initial public offering, estimated at the time at $34 billion, which would have been the largest I.P.O. on record.

The approval was the most recent sign that the Chinese government is ready to loosen its grip on internet companies in an effort to jump-start economic activity in 2023.

After a long period of strict “zero Covid” lockdowns and hefty fines and regulations on Ant Group and other tech giants, Li Qiang, the Communist Party’s new No. 2 official, urged cadres in an economic meeting in December to “vigorously develop the digital economy” and improve their global competitiveness.