(Beijing) The regulator on Friday imposed heavy fines in China on digital giants Tencent and Ant Group, which each have a popular payment system, suggesting the end of a tightening of the screws on technology.
The authorities had taken a very dim view that two private groups, which largely dominate payment systems in China, could have such a weight in the financial system, and are not subject to banking regulations.
Ant Group is the owner of Alipay, a popular phone payment system in China, where cash is now used very little. The company also offers financial services.
Its main competitor is WeChat Pay, owned by internet and video game giant Tencent.
Ant Group is fined 7.1 billion yuan (about $1.3 billion), the regulator said on Friday.
The decision was taken “in view of illegal and regular acts committed by Ant Group […] in recent years” particularly in banking and consumer protection, writes the regulator.
“We will respect the sanction,” Ant Group immediately responded in a statement.
“Under the guidance of financial regulators, Ant Group has proactively led a rectification of its problematic businesses,” the company added.
Its competitor Tencent will have to pay it nearly 3 billion yuan for violations, the regulator also announced.
“Most of the outstanding issues in [digital companies’] finance businesses have now been rectified,” he said, hinting at the end of China’s vast recovery in the tech sector.
The turn of the screw aimed at technology has caused this dynamic sector to lose billions of dollars in market capitalization in recent years.
Ant Group, then owned by e-commerce giant Alibaba, was the first company to be punished by authorities at the end of 2020.
They had stopped at the last minute what should have become the biggest fundraiser in history.
The following month, Alibaba was investigated for impeding competition, then fined heavily.
These measures had marked the beginning of a brutal tightening of regulations in the technology sector, which had severely penalized the profitability of the digital giants.
The power has since been intransigent against digital companies, in particular on issues of collection and protection of personal data, anti-competitive practices but also fundraising abroad.
In 2021, Didi, the “Chinese Uber” was fined approximately $1.7 billion by the regulator, in particular for personal data offenses.
The company, champion in China of the reservation of cars with driver, had maintained in 2021 a fundraiser in New York, despite the reluctance of the Chinese authorities in a context of geopolitical tensions with the United States.
This stubbornness had provoked the dissatisfaction of Beijing, which feared in particular a transfer of sensitive data to American soil.
The sanctions unveiled Friday mark the epilogue to years of turmoil in the tech sector.
Alibaba shares ended Friday up more than 3% on the Hong Kong Stock Exchange, anticipating an imminent announcement from the regulator.
After the announcement by the Chinese authorities, it took 5.59% at the start of the session on Wall Street, where Alibaba is also listed, the market seeing the end of uncertainty.
Regulators will now “support and encourage” the sector, Tencent boss Pony Ma assumes in a statement.