China has said it wants to “break up” Alibaba-owned Alipay in replace of a separate app for the company’s highly profitable loans business.
Beijing wants Ant Group (the affiliate company that owns Alipay) to turn over all of the user data that underpins its lending decisions to the new app.
The new app, Huabei and Jiebei, will be partly owned by the Chinese state.
“The government believes big tech’s monopoly power comes from their control of data, it wants to end that,” said one person close to financial regulators in Beijing to the Financial Times.
The move comes as Beijing’s crackdown on Big Tech continues without signs of slowing down.
Ant Pay planned for a $34.5 billion initial public offering (IPO) in Shanghai and Hong Kong in November in what would have been the largest offering in history.
However Chinese regulators blocked the listing just two days before trading was set to begin in what marked one of its first steps to clamp down on Chinese Big Tech.
Alipay is used by over a billion people in China and one of the country’s biggest payment apps along with WeChat Pay.
Shares in the group fell six per cent after the news was announced.
There are growing concerns amongst Chinese regulators that building the economy will pose a financial risk and investors are keeping an eye on the slow-down of Chinese economic growth.
Alipay’s loans business helped issue around 10 per cent of the country’s non-mortgage consumer loans last year.
The move will see Ant lose the responsibility of being able to independently assess the creditworthiness of a potential borrower.
Instead, the request will be routed to the new joint venture, which the state will have a large stake in, where the credit profile is assessed before being issued if successful.
In the company’s prospectus for its scrapped IPO, it claimed it could make lending decisions “within seconds”.